Inter-regional disparities in industrial growth

INTER-REGIONAL DISPARITIES
IN INDUSTRIAL GROWTH AND STRUCTURE
T.S.Papola
NituMaurya
NarendraJena
November2011
Institute for Studies in Industrial Development

New Delhi

AStudyPreparedasaPartofaResearchProgramme
STRUCTURALCHANGES,INDUSTRYANDEMPLOYMENT
INTHEINDIANECONOMY
MacroeconomicImplicationsofEmergingPattern

Sponsoredby
IndianCouncilofSocialScienceResearch(ICSSR)
NewDelhi
Contents

Preface
I. Introduction
II. ThePresentStudy:Objectives,ScopeandMethod
III. TheExtentandChangeinIndustrialisation:
ConvergenceorDivergenceamongStates
IV. SharesofStatesinTotal,OrganisedandUnorganisedManufacturing
V. DifferencesinStructureofIndustries
OrganisedSector
AgrobasedandNonAgrobased
InterstateDifferencesinStructureandSpecialisation:Top5ProductGroupsinaState
LocationalDiversification:FiveMostImportantStatesinaProductGroup
DifferenceintheStructureofUnorganisedManufacturing
DifferencesintheStructureofTotalManufacturingActivity:AnAccountBasedon
NSSOEmploymentDatafor200405
VI. IndustrialBaseandSpecialisationofStates
VII. InterstateProductivity
DifferencesinManufacturing
OrganisedSector
UnorganisedSector
VIII. Conclusions:WhatExplainsVariations?
MainFindings
ExplainingInterstateVariations
Appendix
References
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ListofTables
1 ShareofManufacturinginTotalGSDP(%)at199394Prices
2 ShareofAgricultureinTotalGSDP(%)at199394Prices
3 ShareofServicesinTotalGSDP(%)at199394Prices
4 RelationshipbetweenStructuralChangeanditsComponentsandRateof
GrowthofGSDP(CorrelationCoefficients)
5 GrowthRateofManufacturingGSDP(at199394prices)
6 StatewiseDistributionofManufacturingGSDP(%)at19934Prices
7 StatewiseDistributionofManufacturingEmployment(UPSS)(%)
8 Share(%)ofRegisteredSectorinManufacturingGSDPat199394Prices
9 GrowthofRegisteredandUnregisteredManufacturingGSDPat199394
Prices
10 ShareofStatesinTotalManufacturingGSDP:Total,Registeredand
Unregistered
11 RankOrdersofStatesinOrganisedandUnorganisedManufacturing
(200607)
12 ShareofAgrobasedProductGroupinOrganisedManufacturing
(NumberofWorkers)
13 ShareofAgrobasedProductGroupinTotalManufacturing
(GrossValueAdded)
14 %ShareofDifferentStatesinTotalIndia(NumberofWorkers)
15 %ShareofDifferentStatesinTotalIndia(GrossValueAdded)
16 TopFiveIndustriesoftheStatesintermsofNumberofWorkersinOrganised
Manufacturing(200607)
17 TopfiveStatesinOrganisedManufacturingintermsofNumberofWorkers
(200607)
18 TopFiveIndustriesofStatesinUnorganisedManufacturingintermsof
NumberofWorkers(200506)
19 TopfiveStatesinUnorganisedManufacturingintermsofNumberofWorkers
(200506)
20 TopFiveIndustriesoftheStatesintermsofNumberofWorkers
(Total)200405
21 TopfiveStatesintermsofNumberofWorkers(Total)200405
22 LocationQuotientsofIndustriesinDifferentStates(20042005)
23 IndustrialBaseofDifferentStates
(IndustrieswithLocationQuotients1)200405
24 PerWorkerProductivityofOrganisedManufacturing
inRs.Lakh(200001)
25 PerWorkerProductivityofOrganisedManufacturing
inRs.Lakh(200607)
26 AverageShareofFiveHighestProductivityIndustriesatallIndialevel
intheGrossValueAddedinOrganisedManufacturing(200607)
27 CapitalLabourRatioinOrganisedManufacturinginRs.Lakh(200607)
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28 CoefficientofCorrelationbetweenPerWorkerProductivityandCapital
LabourRatioinOrganisedManufacturing
29 PerWorkerProductivityofUnorganisedManufacturinginRs.(200001)
30 PerWorkerProductivityofUnorganisedManufacturinginRs.(200506)
31 AverageShareofTopFiveHighestProductivityIndustriesat
allIndialevelintheGrossValueAddedinUnorganisedManufacturing
(200506)
32 CapitalLabourRatioinUnorganisedManufacturinginRs.(200506)
33 CorrelationbetweenPerWorkerProductivityandCapitalLabourRatio
inUnorganisedManufacturing
34 InfrastructureandLevelofIndustrialisation
35 TransportandPowerInfrastructureandLevelofIndustrialisation:
RegressionResults
ListofAppendices
A
B Classificationat2digitlevel(NIC1987)
C Concordancebetween2digitlevelofNIC87&appropriatelevel
ofNIC98(forconvertingNIC98baseddataintermsofNIC87)
D Classificationat2digitlevel(NIC04)
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~vi~
Preface

Institute for Studies in Industrial Development (ISID) has been carrying out a 3-year
Research Programme on Structural Changes, Industry and Employment in Indian Economy:
Macro-economic Implications of Emerging Pattern with the sponsorship of the Indian
Council of Social Science Research (ICSSR) since March 2009. The Programmes envisages
undertaking studies on various aspects of the structural changes in the Indian economy
under the following six major themes:
i) Growth and Structural Changes in Indian Economy

ii) Employment Implications of Structural Changes
iii) Growth and Structure of Industry
iv) Structure of Services Sector
v) Income Distribution, Demand Supply Balances and Price Stability
vi) Trade
The Programme team which consists of several faculty members of the Institute has
identified over a dozen different sub-themes within the above major themes for study. The
present study on Inter-regional Disparities in Industrial Growth and Structure is one of
those identified under the broad theme of Growth and Structure of Industry.
An earlier draft of the paper was presented at a national workshop, organised to

discuss 10 studies at different stages of progress under the Programme, during 78 July
2011. We have immensely benefited from the comments and suggestions made by
participants, especially by Professor A.K. Singh, who chaired the discussion on it and also
made detailed written comments and Dr Dinesh N. Awasthi, who acted as the main
discussant on the paper.
We are grateful to other members of the Programme Team for their comments,
cooperation and help. We are especially thankful to Dr Partha Pratim Sahu for his valuable
guidance on data selection and statistical analysis.
T.S.Papola
NituMaurya
NarendraJena
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~viii~
I. Introduction

Inter-regional disparity in levels of development and incomes is a major issue of

economic, social and political significance in India. That there are wide disparities
across the states is well known and is also recognized as a concern to be addressed
through public policy. Several mechanisms and instruments have been in use to
reduce these disparities since independence. Some of them like the Finance
Commission, a constitutionally provided mechanism and the Planning Commission
are of a standing nature while several others, in the form of policies and programmes
are adopted from time to time to promote development of relatively less developed
states and regions by giving them preferential treatment in central public investment,
and fiscal and financial concessions and incentives.
Public policy instruments, no doubt, influence the growth of economic

activity in different regions, but in ultimate analysis, relative economic position of
different regional entities depends on their rate and pattern of economic growth
which are determined by several other factors, especially the region-specific factors.
According to the dominant theory of modern economic development, industry is
expected to play a major role in creating as well as mitigating disparities among
different regions. Industry is seen as the main engine of growth (Kaldor, 1967) and
industrial development subject to cumulative causation to a larger degree than
development of other sectors (Myrdal, 1957). Industrial development, and
consequently overall economic development of different regions, according to the
typical conventional theory of regional development, is expected to take a path that
finally leads to a convergence (See Barro and Salai-i-Martin, 1992 and 1995). To
begin with, industry goes where industry isas a result of developed infrastructure,
agglomeration and linkages, but subsequently, when diminishing returns set inin
the more industrialised regionsit shifts to less developed regions. Since diminishing
returns set in agriculture much earlier, due to fixity of land and limits to
technological advances, it is industry with continuation of increasing returns for a
reasonably long period of time, that plays the levelling role once the process of its
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development starts in the poorer regions. The historical experience of development,
as a result, has revealed what is called inverted U-shaped behaviour of disparities
in the long period development (Williamson, 1965; Barro and Sala-I-Martin, 1990;
Kuznets, 1955). In a way, this represents the spatial version of Kuznets Hypothesis
on income inequality.
Contrasting the convergence hypothesis there is an equally strong view that

postulates increasing divergence due to technology and agglomeration externalities
which make increasing returns possible over long periods. Different regions situated
differently in terms of initial levels and capacities for development are thus subjected
to cumulative causation. They not only grow differentially due to internal factors,
but differences get reinforced through interaction among them through the
mechanism of back-wash effects (Myrdal, 1957; Hirschman, 1958; Kaldor, 1970).
Differences arise and get perpetuated often by what are called the core-periphery
and dependency relationships that apply both internationally and inter regionally
(Baron, 1957). Technological change, new forms of organisation and transaction
costs are also seen by some, specially the post-Fordist scholars, as factors leading to
widening of disparities (Piore and Sebel, 1984).
What has been the experience in India? Have inter-regional disparities in

levels of incomes, economic development and industrial activity increased or
declined over the post-Independence period, especially since early 1990s when
economic reforms were introduced and the country adopted the path of
globalisation? The fact that wide variations exist in the levels of economic
development, particularly of industrial development, was recognised soon after
Independence. Policy mechanisms and instruments were devised to mitigate these
disparities, specially in industrial sector in the form of establishment of central public
sector undertakings in less industrially developed regions, use of backwardness of
regions as a criterion in industrial licensing, special packages for development of
industrial infrastructure in poorer states, and special fiscal and financial incentives for
industrial development in backward areas. Have they helped in promoting industrial
development in poorer states and regions thus leading to a reduction in inter-
regional disparities in the levels of industrialisation? There is a view that these
policies of state intervention have, in fact, tended to favour better developed
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urbanized areas within the backward states (Lipton, 1977). Some of the policies
aiming at providing a level-playing field to all states, such as Freight Equalisation in
respect of coal, steal and cement have actually been found to disfavour the
industrially backward states like Bihar and Madhya Pradesh.
Most of these policies have been removed, if not reversed, since the
introduction of economic reforms. Has that led to any change in the trends in
interregional variations in growth of industrial activity? There is a view that post-
reform regional development is likely to be more evenly balanced (Elizondo and
Krugman, 1992), as a free flow of goods, services and factors of production would
have strengthened spread effects thus reducing inter-regional disparities (Dholakia,
2009). A study using ASI data has, however, found that the new investments are
spatially more concentrated in the post-reform than in the pre-reform period
(Chakravorty and Lall, 2007). It is, therefore, interesting to study the pattern of
disparities in the post-reform period when most of the interventionist measures
have been removed in comparison with the pre-reform period when they were in
place. If anything, India now has a reduced or spatially disengaged state as far as the
promotion of regional balance is concerned and a more enlarged state in terms of
promoting selected metropolitan regions for receiving investment, especially foreign
direct investment (FDI) (Chakravorty and Lall, 2007, p. 20).
There have been a few studies examining the pattern of interstate disparities
in industrial development in India, covering different periods of time. Some early
studies, covering 1950s and 1960s, observed a decline in disparities (Dhar and
Sastry, 1967; Sardamoni, 1969). Covering the period of 195051 to 197576,
another study (Mathur, 1983) observed that while overall income disparity had
narrowed down, the secondary sector has moved along an inverted U-shaped path
(the primary sector having followed the reverse path). Another study (Awasthi,
1991), covering almost the same period, however, found that interstate disparities in
industrial development had narrowed down. Increasing divergence seems to be the
case during 1970s and 1980s, according to another study (Bajpai and Sachs, 1996)
which finds a reversal of trend in disparity in per capita income from convergence
during 196171 to divergence during 197282 and 198393 and attributes it to
concentrated pattern of industrialisation and of Green Revolution during the latter
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two decades. Another study (Marjit and Mitra, 1996) covering the period (1961
62/198990) found that income disparities across Indian states are on the ascending
part of the inverted U-shaped curve.
All of the few studies that relate to the post-reform period have pointed to a
trend towards greater divergence in industrial growth as industrialised states were
found to be growing faster than backward states (Bhattacharya and Sakthival, 2004).
One of them (Nair, 2005) found this trend to be in contrast with the pre-reform
period. A study that has examined the post-reform behaviour of investment and
industrial location taking ASI census sector data for 1995 as indicative of pre-reform
level of investment and investment in completed or under-implementation projects
during January 1992 to February 1998 from CMI database for investment in post
reform period (Chakravorty and Lall, 2007) has come out with several interesting
findings. Overall, it concludes that there is evidence of the return of cumulative
causation and divergence. It found that advanced region (Western India), though
not the most advanced state (Maharashtra) was the main beneficiary of new
investment; Northern and Eastern Regions lost their shares though Orissathe least
industrialised stategained. Southern Region maintained its share though Karnataka
had a significant gain and Andhra Pradesh suffered a loss. Another interesting aspect
examined by this study related to the trend in localised concentration. Based on
district level investment data it found that only two districts (greater Bombay and
Visakhapatnam) among the top ten in the pre-reform period, could maintain their
position in the top ten in the post reform period, though even these two lost in their
relative share (ibid., Table 2.6). Bharuch, which held 22nd position in pre-reform
period, stood first in post reform period and Surat climbed up from fourteenth to
second position. Madras with sixth rank and Hyderabad with eighth rank in pre-
reform period did not feature even among the top 25 districts in post-reform period.
A geographically significant finding of the study is that all top ten districts in terms of
the share of investment in the post-reform period were situated south of Vindhya,
the corresponding number was six in pre-reform period. Even among the top 25
districts, the study concludes that metropolitan regions have gained, but not
necessarily the largest ones. The phenomenon is described as that of concentrated
decentralisation (ibid., p. 71).
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Why do rates of industrial growth differ among states? It is a natural question
with seemingly obvious answers: infrastructure, human development and expanding
markets are among the factors most often mentioned to explain differences in
growth rates. Level and growth of agriculture is seen as another factor acting both
on supply and demand side to affect the rate of industrial growth. According to a
study (Sastry et. al., 2003), agriculture contributed to industrial growth through
production channel during 1960s, but by 1990s it contributed greatly through the
demand channel. Another study (Chakravorty and Lall, 2007) argues that new
investments tend to go where industrial concentration exists. Does industry go
where industry is; the other factors only explaining existence, rather than growth, of
industry in different regions? A related question, why industrial structure varies
among states in term of degrees of diversification and specialization, is also equally
interesting, as the industrial base varies widely among them. On the basis of an
examination of the industrial structure of different states and changes in it between
1951 and 1965, a study (Alagh et. al. 1971) found that states with specialization in
resource (raw material) based industries have less diversified industrial structure,
while industrial structure of states with a base of rounded spectrum of industries
including capital goods and demand based industries is more diversified. Also, more
industrialised states had a more diversified industrial structure than those with lower
levels of industrialisation. Another study (Awasthi, 1991) covering the period 1961
1978, also confirmed this observation. These propositions need to be examined
afresh in the context of a highly different pattern of industralisation that has emerged
during the last two to three decades.
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II. The Present Study:
Objectives, Scope and Method

The present study examines the issues and propositions outlined above by analyzing
the growth and structure of manufacturing industry in different states of India, in a
comparative framework. It attempts an assessment of the contribution of industry to
the interstate variations in the rates of economic growth. In the process it also
analyses the differences in the industrial structure and factors responsible for
variations in the extent and structure of industrialisation. Interstate variations in the
levels of productivity and capital intensity are also studied. It also examines the
differences in the pre- and post-reform trends at regional levels and pattern of
industrial development, as the earlier studies have covered only a short period after
economic reforms. It also covers the organised and unorganised manufacturing
unlike most of the earlier studies which have covered only the former. Broadly, the
study seeks to answer the following questions:
i) How strong is the relationship between the level of industrialisation and

overall economic development across the states of India? Does this
relationship hold cross-sectionally and temporally?
ii) How is industry distributed across states? What changes have taken place in
the share of different states over the years?
iii) What has been the performance of different states in the growth of industry?
How have the rates of industrial growth varied across states in relation with
the initial levels of industrialisation? Have the industrially better developed
states experienced faster industrial growth?
iv) How does the structure of industriesby product group,

organised/unorganised segments, agro-based and othersdiffer among
states? Have there been significant changes in recent years? What explains
the structural variations in industry among states?
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v) How do technical ratios, like output-labour and capital-labour, differ among
states? Have there been changes in relative position of different states in
these ratios?
vi) What has been the impact of economic reform measures on the relative
industrial performance of different states?
Industry for the purpose of this study includes manufacturing. Period of

study and states covered in different parts of the study some time vary depending
upon the availability of data. Major sources of data for study are: CSO for Gross
State Domestic Product (GSDP) estimates, Annual Survey of Industries (ASI) and
National Sample Survey Organization (NSSO) survey of employment and
unemployment and unorganised enterprises. Due to data limitations some analysis is
attempted only for the organised industry (ASI) and some other only for the
unorganised industry (NSSO Surveys), or for the two separately rather than for the
industrial sector in aggregate except in respect of GSDP of different states and
employment for which data from CSO, National Accounts Statistics and NSSO
quinquennial surveys on employment and unemployment are available.
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III. The Extent and Change in Industrialisation:
Convergence or Divergence among States

ExtentofIndustrialisation
Differences in the extent of industrialisation are one of the most glaring aspects of
the variations in the levels and structure of state economies. The share of
manufacturing in the Gross State Domestic Product (GSDP) varies very widely
among the Indian states. In terms of this indicator, Gujarat with about 30 per cent
share of manufacturing in GSDP was the most industrialised state among the major
states of India in 200809 (Table 1). Other major states which had a higher than the
national figure of 17 per cent were Maharashtra (23.46 per cent), Tamil Nadu (23.32
per cent),Haryana (20.0 per cent), Karnataka (19.85 per cent) and Orissa (17.04 per
cent). Kerala had the lowest 9.96 per cent of its SDP originating in manufacturing.
Andhra Pradesh followed by Bihar and Uttar Pradesh were other states with low
level of industrialisation with only 12 to 14 per cent of their SDP originating in
manufacturing.
Among the three new statesChhattisgarh, Jharkhand and Uttarakhand

Chhattisgarh and Jharkhand feature as relatively better industrialised states with
21.94 and 32.02 per cent share of manufacturing in their SDP. Uttarakhand with
14.12 per cent of its SDP from manufacturing is among the states with a low level of
industrialisation. All states in the North Eastern Region except Assam (10.74 per
cent) had less than 10 per cent of their SDP from manufacturing industry. Among
UTs and other states Pondicherry (65.49 per cent) and Goa (30.08 per cent) showed
a relatively high degree of industrialisation. The share of industry in GDP ranged
between 9.96 per cent in Kerala, the least industrialised state to 29.94 per cent in
Gujarat, the most industrialised state, in 200809. The range of variation seems to
have marginally declined from 198081, when the least industrialised state (Kerala)
had 9.52 per cent of its SDP originating from manufacturing while in the most
industrialised state (Tamil Nadu) manufacturing contributed 31.47 per cent. But the
states in the most industrialised category have changed their relative positions. In
fact, West Bengal which held second position in 198081 has gone out of the group
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Table1
ShareofManufacturinginTotalGSDP(%)at199394Prices
MajorStates 198081 199091 200001 200809
1 AndhraPradesh 13.86 15.32 13.69 12.05
2 Bihar(+) 9.92 12.56 9.17(3.73) 13.27(2.50)
3 Gujarat* 18.92 26.14 30.41 29.94
4 Haryana** 13.65 19.10 20.59 20.00
5 Karnataka 15.25 18.63 17.26 19.85
6 Kerala* 9.52 11.11 11.68 9.96
7 MadhyaPradesh(+) 11.11 15.50 16.46(15.08) 15.35(12.73)
8 Maharashtra* 24.92 26.08 23.93 23.46
9 Orissa 9.08 11.29 12.13 17.04
10 Punjab 9.21 13.61 15.96 16.05
11 Rajasthan 12.43 12.36 16.50 15.63
12 TamilNadu 31.47 28.54 24.36 23.32
13 UttarPradesh(+) 9.01 13.87 13.85(14.00) 14.02(14.01)
14 WestBengal* 20.31 17.80 17.28 16.37
NewStates
15 Chhattisgarh 18.50 21.94
16 Jharkhand 19.17 32.02
17 Uttarakhand 11.74 14.12
NorthEasternStates
18 Arunachal Pradesh* 3.80 2.60 3.43 2.03
19 Assam 9.55 9.17 7.67 10.74
20 Manipur 6.41 13.53 7.93 7.48
21 Meghalaya 1.80 2.42 2.07 8.49
22 Mizoram 1.49 2.87 1.73 2.13
23 Nagaland** 5.09 3.65 1.12 1.40
24 Sikkim 0.00 0.00 4.13 3.48
25 Tripura* 3.44 2.78 4.85 2.82
UnionTerritoriesandOtherStates
26 A&NIslands* 7.27 6.39 4.80 3.35
27 Chandigarh N.A. N.A. 15.63 12.72
28 Delhi 8.25 8.94 11.49 8.80
29 DadarandNagarHaveli N.A. N.A. N.A. N.A.
30 DamanandDiu N.A. N.A. N.A. N.A.
31 Lakshadweep N.A. N.A. N.A. N.A.
32 Pondicherry 20.39 28.74 49.10 65.49
33 Goa* 24.24 22.29 33.26 30.08
34 HimachalPradesh* 3.01 7.32 15.02 13.64
35 Jammu&Kashmir* N.A. N.A. 5.86 8.10
India 13.80 16.60 17.20 17.00
SD 6.78 5.82 5.74 5.29
CV 45.52 33.70 33.06 30.08
Note:1.FigureinparenthesesagainstBihar,MadhyaPradeshandUttarPradesharefortheterritory
after division while those outside include new states Jharkhand, Chhattisgarh and
Uttarakhandrespectively,inthisaswellasothertables.
2. EstimatesofSDandCVarebasedon14majorstates
3.*Latestavailabledataisfortheyear200708,**Latestdataavailableisfortheyear200607
4.N.A:Notavailable
Source:www.mospi.gov.in
of top five, to the seventh position. Haryana, which was below national average, has
acquired fourth position. Tamil Nadu has yielded its first position in 198081 to
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Gujarat in 200809, the latter held fourth position in 198081. Orissa, which was
amongst the least industrialised states in 198081, rose to the national average in
200809. Other states which have experienced relatively rapid industrialisation
during the 28 year period, in terms of a significant increase in the share of
manufacturing in GSDP are: Karnataka, Punjab, Madhya Pradesh, Rajasthan and Uttar
Pradesh. Gujarat, of course, had the fastest advance in industrialisation, raising its
manufacturing share in SDP from 19 per cent in 198081 to 30 per cent in 200809.
Among smaller states and UTs, Himachal Pradesh (from 3.01 per cent in 198081 to
13.64 per cent in 200809) and Pondicherry (from 20.39 per cent in 198081 to
65.49 per cent in 200809) made rapid advance in industrialisation.
West Bengal saw a deindustrialisation insofar as manufacturing now

contributes only 16.4 per cent in SDP as compared to 20.3 per cent 28 years back.
Maharashtra and Andhra Pradesh also experienced some decline in the share of
manufacturing in their SDP from 25 to 24 per cent and from 14 to 12 per cent,
respectively. North Eastern states in which some such decline has taken place are
Arunachal Pradesh (3.80 to 2.03 per cent), Nagaland (5.09 to 1.40 per cent) and
Tripura (3.44 to 2.82per cent). Andaman and Nicobar Island also saw a significant
decline in the share of manufacturing SDP from 7.27 to 3.35 per cent.
Amidst changes in different directions and extent, the overall disparity in the
degree of industrialisation seems to have declined. Both standard deviation (SD) and
coefficients of variation (CV) have declined from one decade to another since 1980
81. SD declined from 6.78 in 198081 to 5.29 in 200809 and CV from 45.52 per
cent to 30.08 per cent (Table 1).
Industrialisation,SDPGrowthRateandStructuralTransformation
Has a faster pace of industrialisation been accompanied also by a larger
transformation of state economies from agricultural to non-agricultural? Is there a
direct relationship between the increase in the share of manufacturing and decline in
that of agriculture, as has been conventionally presumed? In this connection it needs
to be noted that over the years 198081 to 200809, the share of agriculture in the
national GDP declined from 39.70 per cent to 16.20 per cent (Table 2). This decline
has, however, not meant a corresponding gain in the share of manufacturing which
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Table2
ShareofAgricultureinTotalGSDP(%)at199394Prices
MajorStates 198081 199091 200001 200809
1 AndhraPradesh 38.66 33.31 28.61 22.23
2 Bihar(+) 52.45 43.84 38.43(46.56) 25.74(31.62)
3 Gujarat* 38.21 27.02 15.19 16.00
4 Haryana** 49.09 42.94 32.07 23.10
5 Karnataka 43.56 33.45 26.37 13.83
6 Kerala* 41.70 31.16 23.64 15.68
7 MadhyaPradesh(+) 47.30 38.01 24.03(25.87) 23.99(26.23)
8 Maharashtra* 25.53 20.73 15.49 13.35
9 Orissa 54.59 38.69 28.22 19.24
10 Punjab 46.41 46.02 39.21 32.55
11 Rajasthan 43.80 41.11 26.73 24.00
12 TamilNadu 25.25 22.75 17.62 10.99
13 UttarPradesh(+) 48.05 39.27 35.60(35.65) 27.72(28.37)
14 WestBengal* 31.94 30.95 26.06 20.70
NewStates
16 Jharkhand 23.49 15.48
NorthEasternStates
18 Arunachal Pradesh* 44.96 31.79 28.99 16.31
19 Assam 49.21 41.48 34.02 23.93
20 Manipur 28.76 35.44 32.89 26.36
21 Meghalaya 41.75 29.45 25.06 21.03
22 Mizoram 26.96 21.14 19.67 15.38
23 Nagaland** 27.57 24.70 33.94 35.51
24 Sikkim 41.08 34.75 21.86 16.66
25 Tripura* 56.00 42.09 32.05 28.59
26 A&NIslands* 43.69 47.39 29.32 11.90
28 Delhi 4.28 2.98 1.31 0.63
32 Pondicherry 29.08 18.90 6.95 3.52
33 Goa* 20.55 14.53 8.44 4.46
India 39.70 32.20 23.90 16.20
Note:SameasTable1
has increased at a much slower pace, from 13.80 to 17.00 per cent. Major gain in the
share has been for the services which rose from 36.60 per cent in 198081 to 57.30
per cent in 200809.
Similar phenomenon of a shift mainly from agriculture to services is observed

in the case of most of the major states. Yet in some cases, particularly where
industrialisation has been rapid, decline in agriculture has been accompanied, to a
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large extent, by an increase in industry. Thus in the case of Gujarat, share of
agriculture declined from 38 to 16 per cent, that is, by 22 percentages point, it was
accompanied by an equal increase in the share of manufacturing and of services, by
11 percentage point each (Tables 1 & 3). Similarly, in Orissa, a decline in the share of
Table3
ShareofServicesinTotalGSDP(%)at199394Prices
198081 199091 200001 200809
MajorStates
1 AndhraPradesh 39.26 41.71 46.54 51.25
2 Bihar(+) 28.02 31.95 39.76(43.39) 45.41(51.28)
3 Gujarat* 33.22 37.34 44.18 44.38
4 Haryana** 25.39 29.81 40.18 46.43
5 Karnataka 31.59 39.17 46.13 54.53
6 Kerala* 40.92 50.35 56.09 60.73
7 MadhyaPradesh(+) 27.99 33.36 39.82(40.55) 38.22(39.71)
8 Maharashtra* 39.94 43.86 53.36 57.20
9 Orissa 27.16 34.76 43.38 45.07
10 Punjab 36.18 33.48 36.92 41.27
11 Rajasthan 33.94 35.12 41.15 41.90
12 TamilNadu 36.73 39.98 47.93 57.10
13 UttarPradesh(+) 33.94 37.90 40.30(40.34) 42.00(42.44)
14 WestBengal* 40.38 43.34 49.35 53.50
NewStates
16 Jharkhand 33.09 35.17
NorthEasternStates
18 ArunachalPradesh* 29.04 23.08 34.24 23.31
19 Assam 31.57 35.34 44.58 51.05
20 Manipur 23.13 41.59 46.24 41.03
21 Meghalaya 42.46 49.88 53.45 50.79
22 Mizoram 59.10 46.15 64.42 62.46
23 Nagaland** 52.78 59.14 53.46 48.70
24 Sikkim 41.63 51.34 52.91 50.00
25 Tripura* 39.37 49.84 59.23 58.42
26 A&NIslands* 34.16 29.64 50.31 34.39
28 Delhi 82.32 83.06 78.72 81.88
32 Pondicherry 34.56 37.44 40.77 29.38
33 Goa* 39.53 50.61 47.94 55.88
India 36.60 40.60 46.90 57.30
Note:SameasTable1
agriculture was accompanied not only by increase in the share of services, but also
that of manufacturing to a significant extent. On the other side, in Kerala and
Karnataka, services have taken the major share of the loss in the share of agriculture.
In Punjab, agriculture has seen a relatively smaller decline in its share: it is the only
~12~
state in which it still contributed almost one-third (32.6 per cent) of GSDP. The
decline in the share of agriculture has, however benefitted industry more than
services. West Bengal is another stand alone case with everything happening rather
slowly: Agricultural GDP has decline by 11 percentage point only (against 24 per
cent at the national level), industry share has significantly declined and that of
services was much less than the national average. Tamil Nadu is yet another
exceptional case, where share of agriculture has sharply declinedit is now at the
lowest (11 per cent) in any state, share of manufacturing has also significantly
declined, and all the gains have gone to services sector only. Among smaller states
and UTs, a very sharp shift from agriculture to non-agricultural sector is observed in
the case of Goa and Pondicherry. In the case of Goa, share of agriculture declined
from 21 to 4 per cent, which was mostly compensated by an increase in the share of
services from 40 to 56 per cent; Pondicherry saw a decline in the share of
agriculture from 29 to 4 per cent; manufacturing increased its share by 45
percentage points from 20 to 65 per cent.
There are two questions that are of significant interest in regard with the
relationship between growth and structural changes. One, Have growth rate and
structural transformation (shift from agriculture to non-agriculture) taken place
together? And two, Which type of structural transformation, one characterized by
shift to manufacturing or to services, has been more growth augmenting? Gujarat has
been the fastest growing state during the entire period 198081/200809 and in all
the sub-periods since 1991, having recorded a GSDP growth rate of 9.48 per cent
during 19912001 and 11.71 per cent during 20012009 (Appendix A). It also has
undergone a large transformation with share of agriculture in GSDP declining from
38 per cent in 198081 to 16 per cent in 200809. The largest transformation has,
however, been experienced by Karnatakareducing share of agriculture in its GSDP
from 44 per cent to 14 per cent during 19812009. Its rate of growth has also been
quite high in recent years. Orissa has experienced the second highest growth, after
Gujarat during 200109 and it has also seen rapid transformation in its economy:
share of agriculture in its SDP declined from 55 in 198081 to 28 in 200001 and to
19 per cent in 200809. Kerala is another state where both growth rate and
structural transformation have been fast. Slowest transformation is observed in
Punjab and West Bengal; both have also had slow growth of GSDP. Madhya Pradesh
~13~
and Uttar Pradesh are also in the same category. Andhra Pradesh, Haryana and
Rajasthan have grown relatively faster though the process of transformation has been
rather slow in these states. Maharashtra already had a relatively low share of
agriculture initially; saw a significant decline in it and a reasonably high growth rate.
Among the North Eastern states, Mizoram, Nagaland and Sikkim are the
fastest growing states, having recorded a GSDP growth rate of 10 per cent per
annum during 19812009. Mizoram and Sikkim have also undergone a large
transformation with share of agriculture in GSDP declining during 19812009, from
27 per cent to 15 per cent and from 41 to 17 per cent, respectively. Nagaland,
however, seems to have experienced an increase in the share of agriculture from 28
to 36 per cent. Andaman and Nicobar Island, Pondicherry and Goa have not only
experienced faster transformation from agricultural sector to non-agricultural
sector, but have also seen very high growth rates, particularly during 200109.
Insofar as decline in the share of agriculture is taken as a measure of

structural transformation, its relation with growth of GSDP has been rather weak
r=-0.181 if we take the long period 19812009. Yet the two have been significantly
related in the shorter period, 200109 where r=-0.676. States with faster decline in
the share of agriculture also seem to have seen faster growth of GSDP, during this
period. Changes in the share of manufacturing or services, either in the short or long
term do not seem to have any significant relation with GSDP growth rates in states
(Table 4).
Table4
RelationshipbetweenStructuralChangeanditsComponentsand
RateofGrowthofGSDP(CorrelationCoefficients)
8081/9091 9091/0001 0001/0809 8081/0809
CorrelationbetweengrowthofGSDP
&%changeintheshareof
agricultureduring198081/200809 0.275 0.176 0.676* 0.181
&%changeintheshareof
manufacturingduring1980
81/200809 0.078 0.038 0.029 0.056
&%changeintheshareofservices
during198081/200809 0.01 0.04 0.429 0.082
*significantat0.01level.
~14~
Punjab has seen the slowest transformation in its economy: Over a period of
almost thirty years, the contribution of non-agricultural sectors has increased from
54 to 66 per cent only. It still derives about one-third of its SDP from agriculture
highest in any state. Its growth rate has been one of the lowest around 5 per cent,
against the national average of 7 per cent, during 198081/200809. During 2000
01/200809 when the national economy grew at 8.3 per cent per annum, Punjabs
economy grew at 5.4 per cent. Strangely enough, Tamil Nadu, the state with the
largest structural transformation of the economy, with the lowest (11 per cent)
share of agriculture in SDP, has also not done very well in terms of the growth of its
GSDP. The state experienced an average growth rate of 6.5 per cent over the
period 198081/200809, though it has accelerated to 7.6 per cent during 2000
01/200809.
Did structural transformation in favour of manufacturing help in accelerating

growth of a state? Here again, Gujarat provides strong positive evidence: it increased
share of manufacturing in its GSDP from 19 per cent in 198081 to 30 per cent in
200809 and experienced the fastest economic growth overall. Orissa, and Haryana
are other states with significantly large increase in the share of manufacturing and
both of them have grown reasonably fast. Bihar, Karnataka, Madhya Pradesh,
Rajasthan and Uttar Pradesh have seen moderate increase in the share of
manufacturing and relatively low GSDP growth. Punjab, with significantly large
increase in manufacturing share, experienced low growth. Maharashtra and West
Bengal both saw a decline in manufacturing share; while the former grew reasonably
well, the latter grew at a relatively slow rate. On the whole, there appears to be a
positive relation between the increase in the extent of industrialisation and the rate
of economic growth. This relation that holds in the case of most of the 14 major
states is also observed in the case of Assam, Meghalaya, Pondicherry and Goa which
have experienced a large increase in the share of manufacturing along with high
growth rates. Himachal Pradesh, with significantly large increase in manufacturing
share, on the other side, experienced low growth.
There are few major states where the services sector has played more
important role in economic growth. Kerala, which now has the highest share (60.7%)
of services in its GSDP, rising from 41 per cent in 198081 while the share of
~15~
manufacturing remaining constant at around 10 per cent (Table 3), registered a
reasonably high growth. So did Haryana with services share rising from 25 to 47 per
cent and Karnataka with increase in it from 32 to 55 per cent. Services sector has
played an important role in economic growth in most of the North Eastern states,
Goa and Himachal Pradesh. Tamil Nadu and West Bengal did not see large increase
in the share of services, nor did they experience very high growth rates. It appears
that unlike in the country as a whole, services did not make a major contribution to
growth in most states in recent years. It is only a few states which had experienced
high growth in the services sector, which is reflected in what is called a service-led
growth nationally. In most states, industries, particularly manufacturing, seem to
have made a more significant contribution to growth of GSDP. In other words,
structural change in favour of manufacturing is more often accompanied by a higher
GSDP growth than a change in favour of services. The relationship, however, does
not turn up to be consistent once all states are taken together for comparison,
because in some states the manufacturing sector while in other states the service
sector push up the GSDP growth. As a result, the coefficient of correlation between
growth rates and change in the share of manufacturing and of services is not
significant in the shorter or longer periods as noted earlier. It appears that faster
growth of non-agricultural sectors as a whole, irrespective of whether it is derived
from manufacturing or services, leads to high growth of GSDP.
RatesofIndustrialGrowth
How have different states performed in terms of the growth of manufacturing
SDP over the longer period 198081 to 200809 and in the post-reform period,
particularly during 200109 when national average growth rate has been relatively
high. Gujarat is the only major state which has maintained high and accelerating
growth rates over the years: its manufacturing sector grew at over 8 per cent during
198191, at 9.5 per cent during the 19912001 and a much higher rate of 11.7 per
cent during 200109 (Table 5). Among other better industrialised states, Maharashtra
maintained a moderate growth rate of 6 to 8.5 per cent; Tamil Nadu had a much
lower average growth rate of about 6 per centonly during 200109, it attained a
growth of 7.7 per cent per annum; and West Bengals manufacturing sector grew at
~16~
Table5
GrowthRateofManufacturingGSDP(at199394prices)
MajorStates 8081/9091 9091/0001 0001/0809 8081/0809
1 AndhraPradesh 5.36 5.2 6.92 5.1
2 Bihar(+) 6.24 3.18 13.95(1.44) 3.94
3 Gujarat* 8.29 9.48 11.71 8.17
4 Haryana** 10.42 6.8 8.13 7.33
5 Karnataka 7.07 6.9 10.51 7.42
6 Kerala* 3.26 5.92 6.19 5.12
7 MadhyaPradesh(+) 6.52 6.58 5.44(2.26) 5.82
8 Maharashtra* 6.79 6.27 8.64 6.29
9 Orissa 8.78 4.17 15.6 6.68
10 Punjab 8.98 6.43 6.18 6.49
11 Rajasthan 6.66 9.37 7.84 6.96
12 TamilNadu 4.06 5.06 7.7 4.56
13 UttarPradesh(+) 9.53 4.8 6.26(5.85) 5.65
14 WestBengal* 3.32 6.36 6.07 5.21
NewStates
15 Chhattisgarh 11.66
16 Jharkhand 16.88
17 Uttarakhand 12.15
NorthEasternStates
18 ArunachalPradesh* 8.14 7.1 2.85 6.56
19 Assam 2.96 1.87 8.86 3.91
20 Manipur 7.81 3.37 5.19 4.46
21 Meghalaya 7.5 7.74 14.85 11.22
22 Mizoram 9.85 5.42 9.27 7.81
23 Nagaland** 11.73 0.55 8.38 6.11
24 Sikkim N.E. N.E. 6.55 N.E.
25 Tripura* 3.05 12.82 4.52 8.44
26 A&NIslands* 2.63 3.87 7.56 2.8
27 Chandigarh N.E. N.E. 9.2 N.E.
28 Delhi 8.04 3.35 5.83 5.47
29 DadarandNagarHaveli N.E. N.E. N.E. N.E.
30 DamanandDiu N.E. N.E. N.E. N.E.
31 Lakshadweep N.E. N.E. N.E. N.E.
32 Pondicherry 7.44 19.53 14.02 13.05
33 Goa* 0.71 10.68 8.68 8.08
35 Jammu&Kashmir* N.E. N.E. 11.03 N.E.
India 7.44 7.02 8.2 6.77
SD 2.26 1.74 3.15 1.2
CV 33.15 28.21 36.38 19.79
Correlationbetweengrowthof
manufacturingGSDP8081/08
09andinitialshareof
manufacturingGSDP 0.208 0.484** 0.601** 0.285
Note:N.E.=NotEstimated,**Correlationissignificantat0.01level,
Source:SameasTable1
~17~
a still lower rate, averaging about 5 per cent over the entire period and slightly over
6 per cent during the post-reform period.
Some of the less industrialised states have shown spectacular growth in

manufacturing during 200109. Orissa registered a manufacturing growth of 15.6 per
cent. Karnataka has also recorded a manufacturing growth of 10.5 per cent. Haryana
and Punjab saw significantly high growth rates in this sector during 198191, but it
decelerated in the next two decades, particularly in Punjab, where it has been only 6
per cent as against the national average of over 10 per cent. Similar is the case with
Uttar Pradesh. Andhra Pradesh and Kerala have maintained a relatively low growth
rate over the whole period. All the three new states have registered high growth
rate in manufacturing GSDP during 200109, Jharkhand having the highest, about 17
per cent growth rate. Among other states and UTs, Meghalaya, Pondicherry and
Himachal Pradesh registered relatively highabove 11 per centrate of growth
over the entire period 19812009.
Growth rates of manufacturing in different states seem to show a tendency

towards divergence over the longer period. Coefficient of variation among growth
rates of different states was 33 per cent during 198191, it declined to 28 per cent
during 199091/200001; but increased to 36 per cent during 200001/200809.
Also, while better industrialised states grew slower than less industrialised during
198191, the reverse seems to have happened in recent decades. Correlation
between initial level of industrialisation and growth rate was negative during 198191
(-0.317), it turned positive and significant during 199101 (0.484) and 2001-09
(0.601). Thus, it appears that the trend towards a decline in differences in the level of
industrialisation among states observed in earlier years has been reversed in the
post-reform period.
~18~
IV. Shares of States in Total, Organised
and Unorganised Manufacturing

ShareinTotalManufacturing
Maharashtra has always accounted for the largest share in manufacturing output of
the country. In 200607, it contributed about one-fifth of the manufacturing GSDP of
the all states of India. It has maintained that share all along though there is a small
decline in it from that in 198081 (Table 6). Tamil Nadu used to be the second
largest contributor to the national manufacturing GSDP till 199091, but has now
given way to Gujarat: the former accounted for 14 per cent and latter for 8 per cent
of national manufacturing GDP in 198081, their shares in 200607 are 11 per cent
and 14 per cent respectively. West Bengal has been a major loser with a share of 10
per cent in 198081 and only 7 per cent in 200607. Other losers are: Andhra
Pradesh (from 7.3 per cent to 6.1 per cent), Madhya Pradesh (from 5.7 to 4.7 per
cent) Assam (from 1.42 to 0.90 per cent) and Delhi (from 1.95 to 1.87 per cent).
Gainers include Karnataka, Haryana, Goa and Pondicherry. Uttar Pradesh, a
significant contributor with about 8 per cent, has maintained its share. This pattern
of changes in the GSDP shares seems to be in line with the changes in investment
shares reported in an earlier study covering the immediate pre-reform and post-
reform periods (Chakravorty and Lall, 2007).
The four most industrialised states viz. Maharashtra, Tamil Nadu, West
Bengal and Gujarat, accounted for 53 per cent of the total manufacturing GDP of 14
major states of India in 198081; their share is lower at 51 per cent in 200607.
West Bengal continues to be part of this group in 200607, only because Uttar
Pradesh has lost a part of its territory to Uttarakhand, which otherwise would have
had a higher share than that of West Bengal. Among the states with relatively small
(1 to 3 per cent) contribution to national manufacturing GSDP manufacturing in
198081, Haryana, Orissa, Punjab and Himachal Pradesh have improved their shares
while Kerala has a lower share in 200607 than in 198081. Other major states,
Andhra Pradesh and Madhya Pradesh (even including Chhattisgarh) and Bihar (even
~19~
Table6
StatewiseDistributionofManufacturingGSDP(%)at199394Prices
MajorStates 198081 199091 200001 200607
1 AndhraPradesh 7.33 6.80 6.14 6.12
2 Bihar(+) 4.17 4.51 2.54(0.67) 3.62(0.41)
3 Gujarat 7.98 9.58 11.72 13.70
4 Haryana 2.54 3.40 3.63 3.69
5 Karnataka 5.21 5.38 5.86 6.77
6 Kerala 2.71 2.15 2.32 1.98
7 MadhyaPradesh(+) 5.71 6.31 5.70(4.15) 4.71(2.85)
8 Maharashtra 20.51 20.34 19.89 19.70
9 Orissa 1.79 1.55 1.49 2.21
10 Punjab 2.41 3.09 3.46 2.92
11 Rajasthan 3.25 3.47 4.46 3.99
12 TamilNadu 14.81 12.12 11.37 10.58
13 UttarPradesh(+) 7.38 9.68 8.35(7.88) 7.39(6.82)
14 WestBengal 9.70 6.91 7.54 7.02
NewStates
15 Chhattisgarh N.A. N.A. 1.54 1.86
16 Jharkhand N.A. N.A. 1.87 3.21
17 Uttarakhand N.A. N.A. 0.47 0.57
NorthEasternStates
18 Arunachal Pradesh 0.02 0.02 0.03 0.02
19 Assam 1.42 1.08 0.70 0.90
20 Manipur 0.12 0.14 0.11 0.09
21 Meghalaya 0.02 0.03 0.04 0.09
22 Mizoram 0.002 0.01 0.01 0.01
23 Nagaland 0.01 0.03 0.01 0.01
24 Sikkim 0.00 0.00 0.01 0.01
25 Tripura 0.05 0.04 0.11 0.06
26 A&NIslands 0.03 0.02 0.02 0.01
27 Chandigarh N.E. N.E. 0.23 0.22
28 Delhi 1.95 2.47 2.14 1.87
29 DadarandNagarHaveli N.E. N.E. N.E. N.E.
30 DamanandDiu N.E. N.E. N.E. N.E.
31 Lakshadweep N.E. N.E. N.E. N.E.
32 Pondicherry 0.19 0.21 0.61 0.77
33 Goa 0.55 0.40 0.67 0.69
34 HimachalPradesh 0.13 0.27 0.60 0.54
35 Jammu&Kashmir N.E. N.E. 0.26 0.30
India 100.00 100.00 100.00 100.00
SD 5.30 4.97 4.92 4.97
CV 77.67 72.97 72.96 73.65
N.A.=NotApplicable,N.E.=NotEstimated
Source:SameasTable1
including Jharkhand) have lost while, Karnataka and Rajasthan have gained. On the
whole, the relative positions of different states have not changed much, except a 6
percentage point rise in the share of Gujarat and a 4 percentage point decline in the
share of Tamil Nadu and 3 percentage point decline in that of West Bengal. Among
the new states, only Chhattisgarh and Jharkhand each have a significant (about 2 per
~20~
cent) share of manufacturing GDP of the country and both, especially Jharkhand,
have increased their shares since their formation in 2000. Among other states and
UTs only Delhi contributes more than one per cent of manufacturing GSDP and it
has maintained its share of around 2 per cent.
In terms of employment, however, Uttar Pradesh accounts for the largest share of
manufacturing (Table 7). In 200405 (the latest year for which data are available)
Tamil Nadu, West Bengal and Maharashtra employed about 11 per cent each,
Table7
StatewiseDistributionofManufacturingEmployment(UPSS)(%)
1993
1983 94 19992000 200405
MajorStates
1 AndhraPradesh 9.08 8.53 7.73 8.17
2 Bihar(+) 5.71 3.07 5.61 4.65(2.84)
3 Gujarat 6.42 8.25 5.61 7.25
4 Haryana 1.91 1.71 1.72 2.32
5 Karnataka 6.05 6.13 5.44 4.98
6 Kerala 4.46 3.93 3.94 3.6
7 MadhyaPradesh(+) 5.51 4.36 5.3 5.29(4.24)
8 Maharashtra 9.85 10.26 10.36 10.5
9 Orissa 3.67 2.94 3.53 3.8
10 Punjab 2.35 1.87 2.32 2.6
11 Rajasthan 3.86 3.07 3.51 4.54
12 TamilNadu 12.8 14.86 12.7 11.09
13 UttarPradesh(+) 13.26 12.55 15.32 15.80(15.44)
14 WestBengal 10.87 14.38 12.12 10.74
NewStates
15 Chhattisgarh 1.05
16 Jharkhand 1.81
17 Uttarakhand 0.36
NorthEasternStates
18 ArunachalPradesh 0.01 0.02 0.02 0
19 Assam 0.73 0.81 0.92 0.73
20 Manipur 0.13 0.23 0.13 0.16
21 Meghalaya 0.06 0.03 0.02 0.08
22 Mizoram 0.01 0.01 0.01 0.02
23 Nagaland 0.01 0.01 0.01 0.02
24 Sikkim 0.02 0.02 0.01 0.01
25 Tripura 0.14 0.13 0.08 0.12
26 A&NIslands 0.01 0.02 0.02 0.01
27 Chandigarh 0.06 0.16 0.13 0.12
28 Delhi 1.87 2.01 2.39 2.02
29 DadarandNagarHaveli 0.00 0.02 0.04 0.06
30 DamanandDiu 0.00 0.02 0.04 0.03
31 Lakshadweep 0.00 0.00 0.00 0.00
32 Pondicherry 0.12 0.13 0.20 0.14
33 Goa 0.23 0.10 0.14 0.07
35 Jammu&Kashmir 0.57 0.12 0.35 0.69
India 100 100 100 100
Source:NSSReportonEmploymentandUnemployment(VariousRounds)
~21~
Andhra Pradesh 8 per cent and Gujarat 7 per cent of all manufacturing workers in
the country. Karnataka and Madhya Pradesh contributed above 5 per cent each.
Employment shares of different states have not significantly changed over the years,
except some decline in the case of Bihar (even including Jharkhand) and increase in
case of Gujarat. Except the 14 major states, Chhattisgarh, Jharkhand and Delhi, all
other 18 states/UTs contributed less than 1 per cent each of the country wide
manufacturing employment in 200405.
There are large differences between the employment and GSDP shares of
individual states. Maharashtra with over 21 per cent of GSDP, contributed only 11
per cent of employment among the 14 major states. Uttar Pradesh with 16 per cent
employment has much less, about 8 per cent share in GSDP and Gujarat with 14 per
cent SDP had only 7 per cent share in employment. This is a reflection of large
variations of the industrial structure and productivity among states, a point to which
we will turn later in Section VII of this paper.
ShareofOrganisedandUnorganisedSectors
The quality of industrial activity varies significantly across the states
depending on composition in terms of the shares of the organised (registered) and
unorganised (unregistered) segments in manufacturing. The aggregate manufacturing
GSDP of the all states and UTs covered in this study was distributed between
organised (registered) and unorganised (unregistered) sectors in the ratio of 68.61:
31.39 in 200809. The organised sector, no doubt, contributed the major share in
manufacturing GSDP in most of the major states expect West Bengal (42 per cent)
(Table 8). On the other side, it was as high as 87 per cent in Orissa. States with over
75 per cent share of the organised sector include Chhattisgarh, Jharkhand,
Uttarkhand, Assam, Meghalaya, Himachal Pradesh and Goa and those with less than
60 per cent include Kerala, West Bengal, Mizoram, Nagaland, Sikkim, Tripura,
Andaman Nicobar Island, Chandigarh, Delhi and Jammu and Kashmir. Manipur
derives practically all its manufacturing GSDP from the unorganised sector. Among
the major states, Bihar gets only 19 per cent and West Bengal 42 per cent of
manufacturing GSDP from organised sector; all other states drive over 50 per cent
from this segment. Changes in the shares of different states in national GDP from
~22~
Table8
Share(%)ofRegisteredSectorinManufacturingGSDPat199394Prices
198081 199091 200001 200405 200809
MajorState
1 AndhraPradesh 59.01 69 63.91 66.44 66.51
81.69 88.28 88.98
2 Bihar(+) 72.67 79.08 (38.95) (34.66) (18.74)
3 Gujarat* 66.68 69 64.08 85.2 71.66
4 Haryana** 79.03 66.89 70.84 71.7 72.24
5 Karnataka 52.13 63.44 60.98 66.23 72.91
6 Kerala* 54.41 47.71 57.93 51.82 51.26
64.71 66.65 64.07
7 MadhyaPradesh(+) 57.66 61.46 (62.00) (55.27) (53.56)
8 Maharashtra* 69.88 74.99 60.56 62.85 63.18
9 Orissa 62.93 73.44 77.49 86.43 87.19
10 Punjab 68.74 70.62 66.48 63.12 61.26
11 Rajasthan 42.77 57.99 63.63 60.53 61.5
12 TamilNadu 47.96 60.22 63.18 62.45 64.89
56.93 59.20 59.89
13 UttarPradesh(+) 44.7 60.51 (55.67) (57.23) (57.76)
14 WestBengal* 55.47 54.91 44.69 47.66 41.95
NewStates
15 Chhattisgarh 72.01 83.27 80.35
16 Jharkhand 96.98 98.28 98.54
17 Uttarakhand 78.03 83.86 83.8
NorthEasternState
18 ArunachalPradesh* N.A. N.A. N.A. N.A. N.A.
19 Assam 68.64 74.41 71.66 82.48 81.24
20 Manipur 3.9 1.82 1.12 2.42 2.67
21 Meghalaya 36.93 45.64 32.57 62.39 77.41
22 Mizoram 35.48 58.63 26.51 25.15 21.79
23 Nagaland** 0 15.53 27.81 32.66 35.22
24 Sikkim N.A. N.A. 42.3 42.83 42.64
25 Tripura* 13.8 27.32 62.14 42.59 48.17
26 A&NIslands* 73.91 39.01 26.26 23.66 29.81
27 Chandigarh N.E. N.E. 26.01 23.85 25.44
28 Delhi 36.48 40.62 32.21 28.45 24.94
29 DadarandNagarHaveli N.A. N.A. N.A. N.A. N.A.
30 DamanandDiu N.A. N.A. N.A. N.A. N.A.
31 Lakshadweep N.A. N.A. N.A. N.A. N.A.
32 Pondicherry 66.95 77.12 87.52 84.87 92.83
33 Goa* 36.24 74.47 84.18 70.99 84.53
34 HimachalPradesh* 46.54 73.09 79.71 80.96 80.49
35 Jammu&Kashmir* N.A. N.A. 15.76 30.56 30.62
India 58.58 65.51 61.29 64.05 68.61
Source:SameasTable1
manufacturing are obviously the results of the differential rates of growth of the
organised and unorganised segments of manufacturing in different states. In
aggregate, the organised segment has grown faster than the unorganised one in all
the sub-periods during 198081 to 200809 (Table 9). The difference appears to
have been widened during 200001 to 200809. In most states, organised sector has
grown at a higher rate than the unorganised sector. But a few states, namely Kerala,
~23~
Table9
GrowthofRegisteredandUnregisteredManufacturingGSDPat199394Prices
8081/9091 9091/0001 0001/0809 0405/0809
Register Unregist Register Unregist Register Unregist Register Unregist
ed ered ed ered ed ered ed ered
MajorStates
AndhraPradesh 6.83 2.74 4.65 6.3 7.22 6.36 5.65 5.27
15.37 5.78 11.24 9.56
Bihar(+) 6.84 4.25 4.02 1.17 (9.20) (5.86) (8.17) (9.78)
Gujarat* 8.78 7.27 9.6 9.13 13.65 7.67 12.86 11.69
Haryana** 8.35 16.37 7.54 5.18 8.53 7.13 10.48 9.01
Karnataka 9.45 4.15 7.2 6.33 13.15 5.21 14.23 5.29
Kerala* 4.11 1.79 7.82 3.72 4.13 8.69 10.33 11.11
MadhyaPradesh 5.27 5.73 3.38 6.67
(+) 7.71 4.73 7.42 5.17 (0.02) (5.44) (2.96) (5.39)
Maharashtra* 7.48 5.03 4.81 9.5 9.49 7.27 10.19 9.61
Orissa 11.92 2.57 4.36 3.49 17.74 6.06 10.57 9.18
Punjab 9.18 8.53 5.65 8.12 5.26 7.83 7.75 9.95
Rajasthan 9.34 4.12 11.41 6.44 7.74 8.02 11.25 10.59
TamilNadu 6.83 0.79 5.39 4.51 8.62 6.13 9.09 7
6.85 5.43 7.05 5.98
UttarPradesh(+) 12.96 5.71 4.7 4.89 (6.21) (5.38) (6.78) (5.87)
WestBengal* 2.95 3.75 5.05 7.68 4.76 7.09 0.56 8.54
NewStates
Chhattisgarh N.E. N.E. N.E. N.E. 13.11 7.14 6.72 10.29
Jharkhand N.E. N.E. N.E. N.E. 17.15 5.16 12.11 7.96
Uttarakhand N.E. N.E. N.E. N.E. 13.37 7.12 9.27 9.6
NorthEasternStates
Arunachal
Pradesh* N.E. 8.14 N.E. 7.1 N.E. 2.85 N.E. 7.01
Assam 3.84 0.7 1.6 2.63 10.01 5.05 2.02 3.94
Manipur 0.91 7.89 2.75 3.46 15.47 5 10.31 5.86
Meghalaya 10.35 5.49 3.81 10.29 39.15 5.23 25.23 9.36
Mizoram 38.41 22.59 2.51 10.55 5.11 10.67 9.37 13.55
Nagaland** N.E. 10.88 1.44 1.31 11.07 7.17 20.78 14.07
Sikkim N.E. N.E. N.E. N.E. 6.54 6.55 7.35 7.6
Tripura* 7.34 2.04 18.79 8.92 4.82 4.53 5.28 7.15
UnionTerritoriesAndOtherStates
A&NIslands* 2.24 10.38 3.13 5.18 15.03 5.45 21.82 13.46
Chandigarh N.E. N.E. N.E. N.E. 9.88 8.99 15.77 10.51
Delhi 9.17 7.34 2.26 4.01 0.77 8.02 2.59 9.42
DadarandNagar
Haveli N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E.
DamanandDiu N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E.
Lakshadweep N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E.
Pondicherry 8.85 4.48 21.04 12.69 14.63 8.21 39.21 9.57
Goa* 10.31 9.69 12.03 5.46 8.72 8.46 9.9 11.83
Himachal
Pradesh* 19.65 6.25 15.79 12.03 6.66 6.57 6.76 7.45
Jammu&
Kashmir* N.E. N.E. N.E. N.E. 25.19 7.15 12.82 12.92
India 8.28 6.14 7.28 6.54 8.8 7 10.19 8.29
Correlation
betweengrowth
ratesof
registered&
unregistered
manufacturing
GSDP 0.476* 0.501* 0.31 0.408*
Note:*correlationsignificantat0.05percentlevel
Source:SameasTable1
~24~
Madhya Pradesh, Punjab and West Bengal have experienced higher growth of the
unorganised than of the organised segment. In more recent years (0405/0809),
West Bengal has hardly seen any growth in the organised sector GSDP in
manufacturing while its unorganised segment has recorded higher growth than the
national average. By and large the states with higher growth in organised segment
have also experienced higher growth in unorganised segment of manufacturing. Thus
we find that the two rates were significantly correlated across states in each of the
three periods, 198081/199091, 199091/20002001 and 200405/200809 though
the relationship does not hold for the period 200101/200809 (Table 9, last row).
ShareofStatesinOrganisedandUnorganisedIndustry
States with high share of organised manufacturing in the country also have
high share in the unorganised manufacturing, suggesting that unorganised industry
generally coexists with the organised industry. Maharashtra has about 19 per cent of
countrys organised manufacturing, it also has 21 per cent of unorganised
manufacturing, in 200607 (Table 10). Gujarat accounts for 15 per cent of organised
and 11 per cent of unorganised manufacturing. Tamil Nadu has 11 per cent of the
organised as well as unorganised manufacturing. A few cases of exceptional
differences between the states share in total organised and unorganised segments
are: West Bengal with 12 per cent of the unorganised but only 4.5 per cent of the
organised and Bihar and Orissa with much larger share of the organised than of the
unorganised manufacturing.
It is interesting to note that while in some cases, a decline in one segment has been
compensated by an increase in another so as to retain the states share in total
manufacturing or prevent a sharp decline in it; in others, the two have proceeded in
the same direction to result in an increase or a decline in their respective shares.
Thus, Maharashtra saw a decline from 24 per cent in 198081 to 19 per cent in
200607 in its share in organised, but an increase in its share in unorganised
manufacturing from 15 to 21 per cent. As a result, it could maintain its share in total
at about 21 per cent. In Gujarat, both organised and unorganised segments
contributed almost equally to increase in its share in total from 8 per cent to 14 per
cent. Tamil Nadus share declined primarily because of a sharp decline in its share in
~25~
unorganised segment and West Bengal saw a decline in its share in total
manufacturing despite some increase in unorganised segment, because of a sharp
decline in its share of the organised manufacturing. In most cases, however, changes
in the two segments were in the same direction: Andhra Pradesh, Assam, Bihar,
Kerala, MP and Tamil Nadu experienced a decline in their share, both in the
organised and unorganised manufacturing while Gujarat, Haryana, Jammu and
Kashmir and Punjab saw increase in both (Table 10). Thus, it appears that the two
segmentsorganised and unorganisedin manufacturing generally go together: a
state which has a larger share of one also has a larger share of the other and vice
versa. The exact proportions of the two may not be similar, but ranking of states by
the two is remarkably similar. In 200607, ranking of states in terms of the shares of
organised and unorganised in national aggregate were remarkably similar (Table 11)
yielding a rank correlation coefficient of 0.906.
Each of the two segments also showed very high similarity in ranking with
that in total manufacturing. These ranking have also remained quite stable in terms of
the total manufacturing, as well as its two segments. But ranks changed significantly
in some cases in respect of the organised and unorganised segments. So, Karnataka
ranked ninth in 198081, but climbed up to fourth position in 200607 in terms of
its share in organised manufacturing and West Bengal slided down from the second
to the ninth position.
~26~
Table10
ShareofStatesinTotalManufacturingGSDP:Total,RegisteredandUnregistered
TotalManufacturing RegisteredManufacturing UnregisteredManufacturing
198081 199091 200001 200405 200607 198081 199091 200001 200405 200607 198081 199091 200001 200405 200607
MajorStates
1 AndhraPradesh 7.33 6.8 6.14 6.17 6.12 7.39 7.16 6.54 6.34 6.33 7.26 6.11 5.89 5.88 5.74
2 Bihar(+) 4.17 4.51 2.54(0.67) 3.33(0.51) 3.62(0.41) 5.18 5.44 4.49(0.43) 4.61(0.27) 5.01(0.12) 2.75 2.73 1.06(1.06) 1.04(0.93) 1.07(0.94)
3 Gujarat 7.98 9.58 11.72 13.76 13.7 9.09 10.09 14.47 15.22 15.07 6.42 8.61 10.54 11.14 11.18
4 Haryana 2.54 3.4 3.63 3.73 3.69 3.43 3.47 4.15 4.17 4.11 1.29 3.26 2.92 2.93 2.9
5 Karnataka 5.21 5.38 5.86 6.85 6.77 4.64 5.21 6.62 7.38 7.45 6.02 5.7 6.01 5.91 5.52
6 Kerala 2.71 2.15 2.32 1.95 1.98 2.52 1.57 1.61 1.57 1.57 2.98 3.26 2.66 2.65 2.72
7 MadhyaPradesh(+) 5.71 6.31 5.70(4.15) 4.74(3.30) 4.71(2.85) 5.62 5.92 5.78(4.20) 4.66(2.85) 4.64(2.36) 5.84 7.05 5.16(4.08) 4.90(4.10) 4.84(3.75)
8 Maharashtra 20.51 20.34 19.89 19.71 19.7 24.47 23.28 19.35 19.32 19.26 14.91 14.74 20.38 20.39 20.51
9 Orissa 1.79 1.55 1.49 1.98 2.21 1.93 1.74 2.85 2.64 2.97 1.6 1.2 0.8 0.78 0.8
10 Punjab 2.41 3.09 3.46 2.92 2.92 2.82 3.33 2.91 2.86 2.83 1.82 2.63 3.02 3.03 3.09
11 Rajasthan 3.25 3.47 4.46 3.99 3.99 2.37 3.08 3.61 3.86 3.84 4.49 4.23 4.19 4.24 4.26
12 TamilNadu 14.81 12.12 11.37 10.66 10.58 12.13 11.14 9.73 10.82 10.68 18.6 13.98 10.42 10.36 10.4
13 UttarPradesh(+) 7.38 9.68 8.35(7.88) 7.70(7.29) 7.39(6.82) 5.64 8.94 7.28(7.15) 7.04(6.52) 6.79(6.05) 9.86 11.08 9.02(8.68) 8.89(8.68) 8.49(8.23)
14 WestBengal 9.7 6.91 7.54 6.92 7.02 9.19 5.79 5.76 4.68 4.53 10.43 9.03 11.27 10.96 11.6
NewStates
15 Chhattisgarh N.E. N.E. 1.54 1.74 1.86 N.E. N.E. 2.94 2.12 2.28 N.E. N.E. 1.05 1.05 1.08
16 Jharkhand N.E. N.E. 1.87 2.92 3.21 N.E. N.E. 4.22 4.47 4.89 N.E. N.E. 0.13 0.12 0.13
17 Uttarakhand N.E. N.E. 0.47 0.57 0.57 N.E. N.E. 0.76 0.75 0.74 N.E. N.E. 0.26 0.26 0.26
~27~
Table10
ShareofStatesinTotalManufacturingGSDP:Total,RegisteredandUnregistered
TotalManufacturing RegisteredManufacturing UnregisteredManufacturing
198081 199091 200001 200405 200607 198081 199091 200001 200405 200607 198081 199091 200001 200405 200607
NorthEasternStates
18 Aruna cha l Pra des h* 0.02 0.02 0.03 0.02 0.02 0 0 0 0 0 0.04 0.06 0.07 0.05 0.05
19 As s a m 1.42 1.08 0.7 1.05 0.9 1.66 1.23 0.82 1.35 1.13 1.07 0.8 0.51 0.51 0.47
20 Ma nipur 0.12 0.14 0.11 0.1 0.09 0.01 0 0 0 0 0.28 0.39 0.26 0.26 0.25
21 Megha l a ya 0.02 0.03 0.04 0.09 0.09 0.02 0.02 0.05 0.11 0.11 0.04 0.05 0.06 0.06 0.06
22 Mizora m 0 0.01 0.01 0.01 0.01 0 0.01 0 0 0 0 0.01 0.02 0.03 0.03
23 Na ga l a nd 0.01 0.03 0.01 0.01 0.01 0 0.01 0.01 0.01 0.01 0.03 0.06 0.02 0.02 0.03
24 Si kki m 0 0 0.01 0.01 0.01 0 0 0.01 0.01 0.01 0 0 0.02 0.02 0.02
25 Tripura 0.05 0.04 0.11 0.11 0.06 0.01 0.01 0.04 0.12 0.05 0.1 0.08 0.1 0.1 0.1
26 A&NIs l a nds 0.03 0.02 0.02 0.01 0.01 0.03 0.01 0 0.01 0.01 0.02 0.04 0.03 0.02 0.03
27 Cha ndiga rh 0 0 0.23 0.21 0.22 0 0 0.08 0.06 0.08 0 0 0.46 0.47 0.48
28 Del hi 1.95 2.47 2.14 1.95 1.87 1.21 1.53 0.86 0.83 0.73 2.99 4.25 3.87 3.98 3.97
29 Da da ra ndNa ga rHa veli N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E.
30 Da ma na ndDi u N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E.
31 La ks ha dweep N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E.
32 Pondi cherry 0.19 0.21 0.61 0.5 0.77 0.22 0.25 0.66 0.66 1.08 0.15 0.14 0.21 0.21 0.21
33 Goa 0.55 0.4 0.67 0.69 0.69 0.34 0.46 0.92 0.91 0.9 0.85 0.3 0.29 0.29 0.3
34 Hima cha l Pra des h 0.13 0.27 0.6 0.59 0.54 0.11 0.31 0.72 0.73 0.66 0.17 0.21 0.3 0.35 0.31
35 Ja mmu&Ka s hmi r N.E. N.E. 0.26 0.28 0.3 N.E. N.E. 0.14 0.13 0.14 N.E. N.E. 0.55 0.54 0.59
India 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
SD 5.3 4.97 4.92 5.01 4.97 5.89 5.56 4.87 5.07 5.01 5.17 4.29 5.28 5.3 5.36
CV 77.67 72.97 72.96 74.31 73.65 85.52 80.97 71.59 74.59 73.74 76.84 64.22 79.2 79.7 80.55
Source:SameasTable1
~28~
Table11
RankOrdersofStatesinOrganisedandUnorganisedManufacturing(200607)
RankintermsoftheshareinmanufacturinginGSDP
State Total Registered Unregistered
Maharashtra 1 1 1
Gujarat 2 2 3
TamilNadu 3 3 4
UttarPradesh(+) 4 5 5
WestBengal 5 9 2
Karnataka 6 4 7
AndhraPradesh 7 6 6
MadhyaPradesh(+) 8 8 8
Rajasthan 9 11 9
Haryana 10 10 12
Bihar(+) 11 7 14
Punjab 12 13 11
Orissa 13 12 15
Kerala 14 14 13
Delhi 15 18 10
Assam 16 15 18
Pondicherry 17 16 22
Goa 18 17 20
HimachalPradesh 19 19 19
Jammu&Kashmir 20 20 16
Chandigarh 21 21 17
Meghalaya 22 22 24
Manipur 23 28 21
Tripura 24 23 23
ArunachalPradesh 25 29 25
Nagaland 26 24 28
Mizoram 27 27 26
A&NIslands 28 26 27
Sikkim 29 25 29
DadarandNagarHaveli N.E. N.E. N.E.
DamanandDiu N.E. N.E. N.E.
Lakshadweep N.E. N.E. N.E.
CorrelationbetweenshareoftotalandregisteredmanufacturingGSDP 0.971**
CorrelationbetweenshareofregisteredandunregisteredmanufacturingGSDP 0.906**
CorrelationbetweenshareoftotalandunregisteredmanufacturingGSDP 0.968**
Note:**Correlationissignificantat0.01percentlevel
~29~
V. Differences in Structure of Industries

OrganisedSector
Since organised (registered) segment now constitutes a substantially large part of
total manufacturing in the country (accounting for 69 per cent) and also a large part
of the unorganised segment is found to be linked with the organised segment, it
would be meaningful here to go into some more details regarding the product
structure of this segment. This is attempted here in respect of two aspects of the
product groups. In the first instance, we have tried to broadly classify industries into
two groupsagro-based and non agro-based, the former consisting of product
group 2021 to 29 and later 30 to 39, according to the National Industrial
Classification (NIC) 1987 (Appendix-B). Next, we have tried to identify major product
groups (at 2-digit level) of different states and examine industrial diversification and
specialization of states and industries by identifying industries which dominate the
structure of different states and states which account for large part of important
industries. The analysis is further sharpened with the use of location quotients and
coefficients of specialization/diversification.
AgrobasedandNonAgrobased
Even though NIC groupings have changed and we have data according to
1987 scheme till 199798, and 1998 scheme since 199899, it is possible to regroup
the 2-digit industry groups into the broad agro-based and non agro-based as
mentioned above1.
Agro-based products have always dominated the Indian manufacturing

industry in terms of employment, employing majority of workers working in the
sector. Even after experiencing some decline from 58 per cent in 198081, the share
1
To make the new series (200001 and 200607) comparable with the previous one (198081 and
199091) we have used concordance table between NIC 1987 and NIC 1998 prepared by CSO. For
detail see Appendix-C.
~30~
of this group of industries was one-half of the total manufacturing employment in
200607 (Table 12). Their share in gross value added in manufacturing has, however,
been much lower, it was about one-third in 198081, and declined to less than one-
fourth in 200607 (Table 13). The importance of agro-based industries, differed
widely among states both in terms of employment and value added, as also between
shares of the two in individual states reflecting differences in productivity levels
among states.
Table12
ShareofAgrobasedProductGroupinOrganisedManufacturing(NumberofWorkers)
198081 199091 200001 200607
MajorStates
1 AndhraPradesh 76.60 70.94 72.34 65.91
2 Bihar(+) 27.13 17.31 16.11(39.82) 14.13(33.62)
3 Gujarat 64.50 51.84 41.08 36.02
4 Haryana 38.38 39.33 41.76 43.33
5 Karnataka 55.24 48.38 59.01 59.93
6 Kerala 76.80 72.33 74.23 76.85
7 MadhyaPradesh(+) 58.04 46.84 43.93(52.02) 36.59(43.90)
8 Maharashtra 51.28 46.60 46.00 35.78
9 Orissa 42.69 37.47 35.34 29.44
10 Punjab 49.67 54.91 54.13 45.78
11 Rajasthan 50.62 46.37 48.51 46.58
12 TamilNadu 57.63 55.42 61.62 63.28
13 UttarPradesh(+) 67.48 55.44 53.23(53.69) 49.62(51.95)
14 WestBengal 54.02 50.38 60.25 59.37
NewState
16 Jharkhand 7.54 4.89
17 Uttarkhand 46.94 32.45
NorthEasternStates
18 ArunachalPradesh N.A. N.A. N.A. N.A.
19 Assam 89.34 83.22 79.31 64.04
20 Manipur 91.15 73.80 24.44 12.05
21 Meghalaya 56.63 50.49 17.95 7.84
22 Mizoram N.A. N.A. N.A. N.A.
23 Nagaland N.A. 93.77 49.45 72.27
24 Sikkim N.A. N.A. N.A. N.A.
25 Tripura 26.85 17.33 38.34 10.10
26 A&NIslands 86.49 76.10 100.00 100.00
27 Chandigarh 49.18 34.43 20.24 28.43
28 Delhi 47.93 39.51 50.41 56.49
29 DadarandNagarHaveli N.A. 67.40 44.25 36.67
30 DamanandDiu 34.51 20.50 25.20 23.24
32 Pondicherry 92.23 73.91 48.68 32.34
33 Goa N.A. 28.40 24.66 19.21
35 Jammu&Kashmir 53.73 71.21 61.78 38.04
India 57.54 52.49 54.30 50.28
Source:AnnualSurveyofIndustry,CSO
~31~
Table13
ShareofAgrobasedProductGroupinTotalManufacturing(GrossValueAdded)
198081 199091 200001 200607
MajorStates
1 AndhraPradesh 45.87 39.12 32.59 25.24
2 Bihar(+) 12.70 7.30 8.39(46.88) 6.49(80.56)
3 Gujarat 45.44 32.11 20.99 13.19
4 Haryana 23.06 26.40 25.92 22.34
5 Karnataka 30.01 29.81 39.91 33.96
6 Kerala 42.00 38.28 37.66 50.06
7 MadhyaPradesh(+) 23.42 23.36 25.88(35.69) 23.80(41.83)
8 Maharashtra 27.32 24.13 25.88 29.72
9 Orissa 20.46 15.79 11.45 6.69
10 Punjab 36.62 51.26 54.30 55.63
11 Rajasthan 36.60 40.13 26.43 29.48
12 TamilNadu 41.15 39.79 43.90 40.29
13 UttarPradesh(+) 43.63 33.50 35.56(35.96) 30.67(33.53)
14 WestBengal 33.15 30.44 42.05 32.19
NewState
16 Jharkhand 1.64 1.18
17 Uttarkhand 31.24 16.80
NorthEasternStates
18 ArunachalPradesh N.A. N.A. N.A. N.A.
19 Assam 85.97 70.87 50.13 23.04
20 Manipur 79.31 67.36 52.61 28.92
21 Meghalaya 43.06 25.94 11.43 17.73
22 Mizoram N.A. N.A. N.A. N.A.
23 Nagaland N.A. 98.74 75.69 92.94
24 Sikkim N.A. N.A. N.A. N.A.
25 Tripura 42.55 63.35 92.14 48.08
26 A&NIslands 90.41 88.48 100.00 100.00
27 Chandigarh 51.45 28.13 33.11 35.23
28 Delhi 42.44 47.63 63.77 54.85
29 DadarandNagarHaveli N.A. 71.44 31.40 35.03
30 DamanandDiu 7.08 22.70 14.38 22.94
32 Pondicherry 90.42 59.81 20.85 12.61
33 Goa N.A. 9.97 20.86 17.33
35 Jammu&Kashmir 55.47 33.66 53.49 16.11
India 33.75 31.17 30.47 23.74
Source:SameasTable12
Agro-based industries accounted for as much as 77 per cent of manufacturing

employment in Kerala, but only 29 per cent Orissa in 200607. States with
dominance of such industries in employment include Andhra Pradesh, Tamil Nadu,
Karnataka and West Bengal each with about or above 60 per cent share. Bihar and
Orissa have low (less than 40 per cent) contribution of agro-industries in their
manufacturing employment. Three new, Jharkhand, Chhattisgarh and Uttarakhand,
and most other smaller states and UTs, all fall in this category. Two North Eastern
~32~
states Assam and Nagaland, however, have major part of their organised
manufacturing employment in agro- based industry. There does not appear to be any
systematic pattern of the importance of agro-based industries in different states
which could be associated with any one or a set of variables such as agricultural
development and degree of industrialisation.
In aggregate, agro-based industries contribute less to gross value added (24

per cent) than to employment (50 per cent), reflecting lower productivity than in
non agro-based industries. That was true for most of the states and UTs as well. But
that was not the case in Punjab where they contributed 56 per cent of value added
against 46 per cent of manufacturing employment in 200607, reflecting not only
highest productivity in agro-based industries among the states but also higher
productivity in these industries than the non agro-based industries in the state.
Maharashtra, Kerala, Tamil Nadu and Delhi are among states with relatively higher
productivity in this group of industries, though even in these sates their productivity
was lower than that in the non agro-based industry.
Turning to the share of different states in employment in agro-based

manufacturing, Tamil Nadu accounts for the largest chunk (22%) in 200607
followed by Andhra Pradesh (14%), Maharashtra (9%), Karnataka (8%), Uttar Pradesh
(8%), Gujarat (7%) and Kerala and West Bengal (6%) (Table 14).
In the case of non agro-based industries, Maharashtra topped the list with 16
per cent followed by Tamil Nadu (13%) and Gujarat (12%), Andhra Pradesh,
Karnataka, Punjab and UP were other states with a higher than five per cent share
each. It is also worth noting that Gujarat increased its share significantly while West
Bengal had a large fall in its share in all India non agro-based manufacturing
employment during 19812007. In the agro-based sector, Gujarat, Maharashtra,
Uttar Pradesh and West Bengal lost heavily while Karnataka, Madhya Pradesh, Punjab
and Tamil Nadu registered substantial gains.
Importance of different states in terms of their share in value added in agro-

industries follows the similar pattern as in the case of employment. Thus, Tamil
Nadu with a share of 18 per cent tops the list followed by Maharashtra (14%),
Karnataka (10%), Andhra Pradesh (7%) and Gujarat (7%) (Table 15). In respect of
~33~
Table14
%ShareofDifferentStatesinTotalIndia(NumberofWorkers)
MajorStates AgrobasedIndustries NonAgrobasedIndustries
1980 1990 200001 200607 1980 1990 200001 200607
81 91 81 91
1 AndhraPradesh 12.6 15.65 16.39 13.56 5.22 7.08 7.45 7.09
2 Bihar(+) 2.1 1.46 0.90 0.61 7.65 7.73 5.55 3.74
(0.59) (0.47) (1.06) (0.93)
3 Gujarat 11.47 8.67 6.75 6.71 8.56 8.9 11.5 12.05
4 Haryana 1.49 2.18 2.76 3.72 3.24 3.72 4.57 4.92
5 Karnataka 4.85 4.63 6.32 8.37 5.35 5.46 5.22 5.65
6 Kerala 5.18 5.18 5.97 5.83 2.12 2.19 2.46 1.78
7 MadhyaPradesh 3.83 3.90 3.24 2.56 3.75 4.89 4.91 4.48
(+) (2.79) (1.88) (3.05) (2.43)
8 Maharashtra 15.32 13.13 11.18 9.03 19.81 16.62 15.6 16.38
9 Orissa 1.09 1.09 1.06 0.95 1.99 2.01 2.31 2.3
10 Punjab 2.64 4.52 4.57 4.66 3.63 4.1 4.6 5.57
11 Rajasthan 1.87 2.32 2.54 2.86 2.47 2.96 3.2 3.31
12 TamilNadu 10.7 13.16 17.26 21.82 10.66 11.69 12.78 12.8
13 UttarPradesh(+) 11.02 9.68 6.89 7.57 7.23 8.6 7.20 7.78
(6.48) (6.98) (6.65) (6.53)
14 WestBengal 12.45 9.08 8.3 6.09 14.53 9.88 6.51 4.21
NewState
15 Chhattisgarh 0.45 0.67 1.86 2.05
16 Jharkhand 0.31 0.14 4.49 2.81
17 Uttarkhand 0.41 0.59 0.55 1.25
NorthEasternStates
18 ArunachalPradesh N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
19 Assam 2.72 2.5 2.25 1.89 0.44 0.56 0.7 1.08
20 Manipur 0.02 0.01 0.01 0.01 0 0.01 0.02 0.04
21 Meghalaya 0.03 0.02 0 0.01 0.03 0.02 0.02 0.11
22 Mizoram N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
NorthEasternStates
23 Nagaland N.A. 0.06 0.03 0.06 N.A. 0 0.04 0.02
24 Sikkim N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
25 Tripura 0.08 0.05 0.09 0.05 0.29 0.26 0.17 0.42
26 A&NIslands 0.1 0.11 0.06 0 0.02 0.04 0 0
27 Chandigarh 0.1 0.1 0.04 0.05 0.14 0.21 0.17 0.13
28 Delhi 1.37 1.28 1.24 1.25 2.02 2.17 1.44 0.97
29 DadarandNagar N.A. 0.1 0.4 0.56 N.A. 0.05 0.6 0.98
Haveli
30 DamanandDiu 0.11 0.02 0.24 0.4 0.27 0.07 0.85 1.32
31 Lakshadweep N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
32 Pondicherry 0.41 0.38 0.45 0.33 0.05 0.15 0.56 0.7
33 Goa N.A. 0.1 0.16 0.16 N.A. 0.28 0.58 0.67
34 HimachalPradesh 0.08 0.25 0.52 0.5 0.18 0.32 0.46 0.85
35 Jammu&Kashmir 0.38 0.25 0.33 0.36 0.45 0.11 0.25 0.6
India 100 100 100 100 100 100 100 100
CorrelationBetweenAgroandNonAgrobasedProductGroupin200607(Numberof 0.797**
Workers)
~34~
Table15
%ShareofDifferentStatesinTotalIndia(GrossValueAdded)
AgrobasedIndustries NonAgrobasedIndustries
1980 1990 1980 1990
MajorStates 81 91 200001 200607 81 91 200001 200607
1 AndhraPradesh 6.36 7.41 6.49 6.89 3.83 5.22 5.88 6.35
0.92 0.66 4.38 2.95
2 Bihar(+) 2.12 1.28 (0.76) (0.55) 7.42 7.34 (0.38) (0.04)
3 Gujarat 13.18 9.46 8.58 7.47 8.06 9.06 14.15 15.3
4 Haryana 2.1 2.81 3.54 3.93 3.58 3.55 4.43 4.25
5 Karnataka 4.66 5.18 7.48 10.12 5.54 5.52 4.93 6.13
6 Kerala 3.63 2.81 2.91 1.86 2.55 2.05 2.11 0.58
MadhyaPradesh 4.75 5.05 5.96 5.03
7 (+) 4.05 4.58 (4.51) (4.72) 6.74 6.81 (3.56) (2.04)
8 Maharashtra 20.05 17.75 16.35 14.36 27.19 25.28 23.66 27.92
9 Orissa 1.29 1.1 0.65 0.53 2.56 2.65 2.22 2.28
10 Punjab 2.98 5.87 5.36 6.14 2.63 2.53 1.98 1.52
11 Rajasthan 2.41 3.91 3.14 3.84 2.13 2.64 3.83 2.86
12 TamilNadu 11.99 14.29 16.66 18.01 8.74 9.8 9.33 8.31
8.70 8.83 6.91 6.21
13 UttarPradesh(+) 7.84 8.98 (8.05) (8.00) 5.16 8.07 (6.28) (4.94)
14 WestBengal 11.34 5.86 5.55 3.82 11.66 6.06 3.35 2.5
NewState
15 Chhattisgarh 0.24 0.32 2.4 2.98
16 Jharkhand 0.15 0.11 4 2.91
17 Uttarkhand 0.66 0.83 0.64 1.27
NorthEasternStates
18 ArunachalPradesh N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
19 ASSAM 2.51 3.83 1.49 0.98 0.21 0.71 0.65 1.02
20 Manipur 0.002 0.005 0.003 0.003 0 0.001 0.001 0.002
21 Meghalaya 0.009 0.012 0.003 0.005 0.006 0.015 0.01 0.007
22 Mizoram N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
23 Nagaland N.A. 0.03 0.02 0.05 N.A. 0 0 0
24 Sikkim N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
25 Tripura 0.01 0.03 0.32 0.11 0.01 0.01 0.01 0.04
26 A&N.Island 0.04 0.09 0.02 0 0 0.01 0 0
27 Chandigarh 0.07 0.1 0.15 0.1 0.03 0.12 0.13 0.06
28 Delhi 0.74 2.08 3.75 1.77 0.51 1.04 0.93 0.45
29 Dadra&NHaveli N.A. 0.31 1.79 2.08 N.A. 0.06 1.71 1.2
30 Daman&Diu 0.05 0.02 0.6 1.16 0.33 0.03 1.56 1.21
31 Lakshadweep N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.
32 Pondicherry 0.21 0.33 0.79 0.34 0.01 0.1 1.31 0.72
33 Goa N.A. 0.09 0.92 1.13 N.A. 0.36 1.52 1.68
34 HimachalPradesh 0.1 0.37 0.92 1.07 0.14 0.34 0.88 1.75
35 Jammu&Kashmir 0.26 0.18 0.19 0.27 0.11 0.16 0.07 0.43
India 100 100 100 100 100 100 100 100
CorrelationBetweenAgroandNonAgrobasedProductGroupin200607(GrossValue
Added) 0.746**
non agro-based industries: the situation is similar, insofar as Maharashtra with largest
share in employment also contributes the largest (28%) to value added, Gujarat with
15 per cent and Tamil Nadu with 8 per cent of value added have 12 and 13 shares in
~35~
employment. Andhra Pradesh and Karnataka follow them, though in terms of
employment Uttar Pradesh is ahead of them. It also needs to be noted that share of
Gujarat and Andhra Pradesh in all states value added in non agro-based industries
has vastly increased while that of Bihar and West Bengal has drastically declined.
Maharashtra and Tamil Nadu have been able to retain their shares.
Do the two segments of manufacturing industryagro-based and others

follow each other? This may primarily be the size effect with the states with larger
overall industrial sector having larger share of both segments. Still, it is interesting to
note that the distribution of the two segments across the states is very significantly
correlated. The states with larger share of one also have the larger share of the
other, both in respect of employment and value added. Correlating the state shares
between agro and non agro in industries in 200607, the coefficient turned out to be
+0.797 in respect of workers and +0.746 in respect of value added (both coefficients
being significant at 0.01 per cent level).
InterstateDifferencesinStructureandSpecialisation:
Top5ProductGroupsinaState
As in the case of the composition of manufacturing industry in terms of agro-
based and non agro-based groups, industrial structure of states differs in terms of
product groups at more disaggregated (2-digit) level. We look here at the top five
product groups in terms of their contribution to employment in organised
manufacturing in a state to see to what extent the product groups featuring in this bunch
differ from state to state. This exercise also enables us to see the degree of
specialization or diversification of the manufacturing sector in a state, as shown by the
percentage of employment claimed by the five top industries. This analysis has been
attempted for the year 200607.
Among all states and UTs, food products feature in 24 out of 31, for which
data are available (data are not available for Arunachal Pradesh, Mizoram, Sikkim and
Lakshadweep), in the top five product groups (Table 16). The next most ubiquitous
groups among the top five in 18 states and Union Territories are non-metallic
mineral products and machine tools and machinery. Different states, however, show
diverse patterns insofar as the largest product group is concerned. Textiles group
~36~
TTable16
TopFiveIndustriesoftheStatesintermsofNumberofWorkersinOrganisedManufacturing(200607)
Totalof
2021 22 23+24+25 26 27 28 29 30 31 32 33 34 3536 37 38 39 five
MajorStates
1 Andhra Pra des h * *35.04 * * * 75.67
2 Bi ha r * * * * *53.69 85.54
3 Guja ra t * *20.25 * * * 64.48
4 Ha rya na * * * * *25.53 74.22
5 Ka rna ta ka * *38.10 * * * 71.34
6 Kera l a *48.87 * * * * 77.97
7 Ma dhya Pra des h * *16.20 * * * 62.6
8 Ma ha ra s htra * * * * *14.23 56.66
9 Ori s s a * * * * *45.14 84.33
10 Punja b *18.68 * * * * 66.01
11 Ra ja s tha n * *26.73 * * * 67.82
12 Ta mi l Na du * * *25.26 * * 69.74
13 Utta rPra des h *21.22 * * * * 59.11
14 Wes tBenga l * *35.99 * * * 76.53
NewStates
15 Jha rkha nd * * *51.90 * * 92.08
16 Chha tti s ga rh * * * *54.36 * 87.45
17 Utta ra kha nd * * * * *22.58 78.95
~37~
TTable16
TopFiveIndustriesoftheStatesintermsofNumberofWorkersinOrganisedManufacturing(200607)
Totalof
2021 22 23+24+25 26 27 28 29 30 31 32 33 34 3536 37 38 39 five
NorthEasternStates
18 Arruna cha l Pra des h N.A.
19 As s a m *56.10 * * * * 91.68
20 Ma ni pur * * *87.95 100
21 Megha l a ya * * * *47.11 * 100
22 Mi zora m N.A.
23 Na ga l a nd * * *63.74 * * 100
24 Si kki m N.A.
25 Tri pura * * * *86.46 * 97.25
26 A&N.Is l a nd *98.39 * 100
27 Cha ndi ga rh * * * * *28.41 74.82
28 Del hi *37.91 * * * * 74.7
29 Da dra &NHa vel i *27.64 * * * * 83.5
30 Da ma n&Di u * * *33.72 * * 80.75
31 La ks ha dweep N.A.
32 Pondi cherry * *18.19 * * * 62.91
33 Goa * *26.85 * * * 71.84
34 Hi ma cha l Pra des h *23.65 * * * * 75.33
35 Ja mmu&Ka s hmi r * * *21.44 * * 66.3
India *13.99 * * * * 54.28
Note:Figureinparenthesesshowsthehighestshareoftheindustryinthestates,SourcesameasTable12
~38~
and food products are the largest in each of the six states. A single product group
(out of 15 two-digit industries) accounts for over 50 per cent of the organised
sector manufacturing employment in several, mostly less industrialised/smaller states.
Thus, in Manipur and Tripura non-metallic mineral products dominate with 88 and
86 per cent of workers respectively. The same group dominates in Bihar, though
with small share (54 per cent) in total employment. Chhattisgarh and Jharkhand have
52 and 54 per cent, respectively, of organised sector manufacturing employment in
basic metal industries. In Andaman and Nicobar Islands and Assam, food products
dominate with 98 and 56 per cent employment respectively. Wood and wood
products is the largest industry in Nagaland with 64 per cent of employment.
Industries with significant domination though with smaller proportion (between 33%
to 55%) of total employment in different states are: beverages and tobacco in Andhra
Pradesh (35%), food products in Kerala (49%), basic metals in Orissa (45%), textile
products in Delhi and Karnataka (38% each), textiles in West Bengal (36%) and non-
metallic mineral products in Meghalaya (47%).
The above features suggest a high degree of specialization in the product

structure of different states. That is also reflected by the high proportion of total
employment accounted for by the largest five industry groups. Among major states,
Andhra Pradesh, Bihar, Kerala, Orissa and West Bengal had over 75 per cent of their
respective organised manufacturing employment concentrated in top 5 industry
groups. Haryana came close to them with a figure of 74 per cent as also Karnataka
with 71 and Rajasthan with 70 per cent. The three new states also showed very high
degree of concentration. So did all the states in Northeast with a much higher
degree. Product structure of Gujarat, Maharashtra, Madhya Pradesh, Punjab and
Uttar Pradesh, on the other side, is relatively well-diversified with the top five
industries contributing less than two-thirds of total employment. Maharashtra has
the most diversified industrial structure with the top five industries contributing only
57 per cent and even the largest industry group (transport equipment) accounting
for only 14 per cent of employment. Interestingly, the largest group which accounted
for similar share in total employment in organised manufacturing in the country is
food products.
~39~
LocationalDiversification:FiveMostImportantStatesina
ProductGroup
How are different industries dispersed or concentrated among states?
Leather products is most concentrated industry with the five largest contributing
states accounting for 84 per cent of total employment in that industry with Tamil
Nadu alone accounting for 41 per cent (Table 17). That is followed by beverages and
tobacco with 83 per cent of employment in five largest contributing states and
Andhra Pradesh alone accounting for 56 per cent. Next comes textile products with
82 per cent share of the five top states and 39 per cent of the largest contributing
state, namely Tamil Nadu. Most other industries seem reasonably dispersed in their
location; though the top five states contribute more than half of total employment in
all cases. Non-metallic mineral products, chemical products, wood products and
metal products are among the most dispersed industries with the top five states
contributing between 51 to 55 per cent each of their employment.
DifferenceintheStructureofUnorganisedManufacturing
TopFiveIndustries
Based on the NSSO data for 200506, we have also attempted a look at the
interstate differences in product structure and specialization and locational
differences among different industry groups, in the case of unorganised
manufacturing. On the whole, product structure of unorganised manufacturing is
more similar among different states than of organised manufacturing. Thus, textile
products feature among the top five industry groups in terms of employment in all
the states and Union Territories. Food products also have similar presence in all
UTs, except Delhi and Daman and Diu (Table 18). Wood and wood products is also
among the important industries in 31 out of the 35 states and UTs. Unlike in the
case of organised manufacturing, where a single product group accounted for more
than 50 per cent of employment in several cases, there is such single industry
dominance in the unorganised manufacturing only in two cases: food products in
Arunachal Pradesh and textiles in Manipur. Cases of a single industry contributing
between one-third to one-half of employment were also less frequent in the case of
the unorganised than of the organised manufacturing. Thus, the product structure of
~40~
Table17
TopfiveStatesinOrganisedManufacturingintermsofNumberofWorkers(200607)
IndustryCode
AndhraPradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
MadhyaPradesh
Maharashtra
Orissa
Punjab
Rajasthan
TamilNadu
UttarPradesh
WestBengal
Chhattisgarh
Jharkhand
Uttaranchal
Assam
Manipur
Meghalaya
Nagaland
Tripura
A&N.Island
Chandigarh
Delhi
Dadra&NHaveli
Daman&Diu
Pondicherry
Goa
HimachalPradesh
Jammu&Kashmir
Totaloffive
2021 *13.53 * * * * 60.10

22 *55.7 * * * * 82.60
23+24+25 * * * *27.83 * 74.42
26 * * * *38.70 * 81.92
27 * * *18.54 * * 53.40
28 * * *15.48 * * 58.55

29 * *40.76 * * * 84.16
30 * *20.34 * * * 68.32
31 * * *15.96 * * 53.31
32 *12.60 * * * * 51.34
33 *14.19 * * * * 54.86
34 * *18.64 * * * 64.79
3536 * * *18.26 * * 59.26
37 * * *27.28 * * 76.61
38 *27.14 * * * * 72.23
~41~
Table18
TopFiveIndustriesofStatesinUnorganisedManufacturingintermsofNumberofWorkers(200506)
Totalof
2021 22 23+24+25 26 27 28 29 30 31 32 33 34 3536 37 38 Five
MajorStates
1 Andhra Pra des h * * * *22.36 * 84.61
2 Bi ha r *25.88 * * * * 85.29
3 Guja ra t * * * * *28.05 77.08
4 Ha rya na * *29.28 * * * 72.86
5 Ka rna ta ka *26.46 * * * 79.09
6 Kera l a * * * *23.39 * 74.05
7 Ma dhya Pra des h * *40.53 * * * 86.31
8 Ma ha ra s htra * *32.34 * * * 83.52
9 Ori s s a * * * *36.22 * 87.01
10 Punja b * *39.84 * * * 76.16
11 Ra ja s ta n * * *26.89 * * 77.76
12 Ta mi l Na du * * *23.05 * * 66.89
13 Utta rPra des h * * *32.38 * * 79.91
14 Wes tBenga l * * * *24.4 * 80.58
NewStates
15 Chha tti s ga rh * * *28.05 * * 84.79
16 Jha rkha nd * *38.98 * * * 91.06
17 Uttra kha nd *27.92 * * * 86.08
~42~
Table18
TopFiveIndustriesofStatesinUnorganisedManufacturingintermsofNumberofWorkers(200506)
Totalof
2021 22 23+24+25 26 27 28 29 30 31 32 33 34 3536 37 38 Five
NorthEasternStates
18 Aruna cha l Pra des h *54.23 * * * * 96.47
19 As s a m * * * * *22.94 86.5
20 Ma ni pur * *60.19 * * * 95.89
21 Megha l a ya * * *34.67 * * 81.08
22 Mi zora m *38.79 * * * * 94.47
23 Na ga l a nd * * *24.27 * * 89.44
24 Si kki m * * *31.11 * * 91.53
25 Tri pura *41.72 * * * * 92.52
26 Anda ma n&Ni cober * *30.13 * * * 80.73
27 Cha ndi ga rh * *31.47 * * * 90.15
28 Del hi *37.99 * * * * 80.71
29 Da dra &Na ga rHa vel i * * *37.57 * * 88.5
30 Da ma n&Di u * * * * *23.86 86.14
31 La ks ha dweep * * *43.12 * * 99.07
32 Pondi cheri * *24.07 * * * 64.73
33 Goa * * *19.58 * * * 75.48
34 Hi ma cha l Pra des h * * *25.23 * * 89.27
35 Ja mmu&Ka s hmi r * * *48.72 * * 92.14
INDIA * * * *22.02 * 73.41
Note:Figureinparenthesesshowsthehighestshareoftheindustryinthestates
Source:NSSOsurveyonUnorganisedManufacturing(62ndRound)
~43~
individual states appears to be much more diversified in the case of the former than
the latter.
Diversification, however, does not seem to be very wide, as the top five
industries accounted for over 80 per cent of employment in 25 states/UTs and
between 75 to 80 per cent in 6 states and UTs. By this measure, the unorganised
manufacturing shows a narrow, if not narrower, product structure as the organised
manufacturing in different states. Tamil Nadu seems to have the most diversified
structure with the top five industries contributing about two-thirds of total
unorganised manufacturing employment. In the case of the organised manufacturing,
the largest five industries contributed less than two-thirds of total employment in as
many as seven states.
There appears to be a significant similarity among states in so far as the top

five product groups are concerned. Food products, beverages and tobacco, textiles,
textile products and wood products which ranked the highest in that order at all
India level, accounting for 73 per cent of employment in the unorganised
manufacturing, also are the top five groups in the case of Andhra Pradesh, Assam,
Kerala and West Bengal. Four of them feature among the top five in Bihar, Himachal
Pradesh, Jammu and Kashmir, Karnataka, Madhya Pradesh, Maharashtra, Orissa,
Rajasthan and Uttar Pradesh. Three of them feature in rest of the states, except
Uttarakhand. The largest industry, however, is obviously different in different states.
Textile products is the largest in nine states, food products, wood products and
beverages and tobacco in three states each and textiles in one (Tamil Nadu) state. In
Gujarat, other products make the largest group.
TopfiveStates
How are the unorganised manufacturing industries distributed among
different states? Here again, we have looked at the shares of the top five states.
Taking all industries, the top five states are Andhra Pradesh, Maharashtra, Tamil
Nadu, Uttar Pradesh and West Bengal together accounting for 55 per cent of the
nation-wide employment in unorganised manufacturing, West Bengal being at the top
with a share of 15 per cent (Table 19). So far as individual industries are concerned,
rubber and plastic products is most concentrated in the top five states (Bihar,
~44~
Table19
TopfiveStatesinUnorganisedManufacturingintermsofNumberofWorkers(200506)
IndustryCode
AndhraPradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
MadhyaPradesh
Maharastra
Orissa
Punjab
Rajesthan
TamilNadu
UttarPradesh
WestBengal
Chhattisgarh
Jharkhand
Uttrakhand
ArunachalPradesh
Assam
Manipur
Meghalaya
Mizoram
Nagaland
Sikkim
Tripura
Andaman&Nicober
Chandigarh
Delhi
Dadra&NagarHaveli
Daman&Diu
Lakshadweep
Pondicherry
Goa
HimachalPradesh
Jammu&Kashmir
Totaloffivetop5
2021 * * * *17.47 * 58.45

22 * * * * * *21.44 63.07
23+24+25 * * * *24.05 * * 66.41
26 * * * *21.34 * 61.89
27 * * * * * *18.42 59.78
28 * * *28.38 * * 68.33
29 * * * * *27.34 60.53
30 * * *36.62 * * 77.12
31 * * *19.52 * * 62.27
32 * * * *17.57 * 52.99
33 * *21.83 69.43
34 * * *16.99 * * 54.21
3536 * *15.54 * * * 60.99
37 * * * *28.28 * 76.39
38 *25.08 * * * * 68.82
Note:Figureinparenthesesshowsthehighestshareofthestatesintheindustry
~45~
Karnataka, Tamil Nadu, Uttar Pradesh and West Bengal) accounting for 77 per cent
of total employment followed by transport equipment with five top states
(Maharashtra, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal) accounting for
76 per cent of total employment in unorganised segment of this industry. Non-
metallic mineral products and metal products, on the other side, are most dispersed
groups with the top five states contributing 53 and 54 per cent, respectively, of their
total employment.
On the whole, unorganised segment of most of the industry groups seems

well dispersed among different states. The cases of an individual state claiming a
significant share in total employment are not many. Rubber and plastics with 37 per
cent of employment in Tamil Nadu, paper products with 28 per cent employment
again in Tamil Nadu, transport equipment with 28 per cent employment in Uttar
Pradesh and leather products with 27 per cent employment in West Bengal are the
only industries where a single state claimed more than one-fourth of total
employment. On this basis, metal products, machinery, food products, wood and
wood products and non-metallic mineral products are locationally most dispersed as
no single state claimed 20 per cent or more of their respective total employment in
the unorganised segment.
DifferencesintheStructureofTotalManufacturingActivity:
AnAccountBasedonNSSOEmploymentDatafor200405
TopFiveIndustries
Most features of the industrial structure of different states and location
pattern of different industries among states in aggregate terms are similar to those
revealed by data on organised or unorganised segments of manufacturing, because
these two segments also share common characteristics in these respects. As such
food products and wood products are featured among the five largest industries (in
terms of employment) in 25 out of 35 states/UTs; and textiles products in 24 and
textiles in 23 (Table 20). Thus, the industrial structure of most states and UTs were
similar to the extent of the common importance of these four industries. These
industries were also among the top five in the country as a whole, non-metallic
~46~
Table20
TopFiveIndustriesoftheStatesintermsofNumberofWorkers(Total)200405
Totalof
15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Five
MajorStates
1 Andhra Pra des h * * *(19.60) * * 72.12
2 Bi ha r * *(21.55) * * * 83.24
3 Guja rt * * * * *(23.42) 69.6
4 Ha rya na * *(14.48) * * * 52.68
5 Ka rna ta ka * * * *(21.81) * 70.78
6 Kera l a *(19.32) * * * * 74.93
7 Ma dhya Pra des h * *(31.83) * * * 71.85
8 Ma ha ra s htra * * *(16.37) * * 57.14
9 Ori s s a * * * *(38.98) * 82.03
10 Punja b * *(23.96) * * * 63.82
11 Ra ja s tha n * *(20.92) * * * 70.94
12 Ta mi l Na du * * *(30.30) * * 64.22
13 Utta rPra des h * *(24.39) * * * 70.36
14 Wes tBenga l * * *(18.32) * * 67.7
NewStates
15 Chhatti s ga rh * * * *(19.17) * 71.88
16 Jha rkha nd * * * *(19.55) * 71.09
17 Utta ra kha nd * * *(20.08) * * 69.82

~47~
Table20
TopFiveIndustriesoftheStatesintermsofNumberofWorkers(Total)200405
Totalof
15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Five
NorthEasternStates
18 Aruna cha l Pra des h *(32.98) * * * * 85.61
19 As s a m * * * *(25.61) * 79.3
20 Ma ni pur * *(58.13) * * * 93.74
21 Megha l a ya * *(32.79) * * * 89.36
22 Mi zora m * *(32.14) * * * 86.78
23 Na ga l a nd * *(56.37) * * * 98.61
24 Si kki m * * * * *(22.51) 86.69
25 Tri pura * * *(32.05) * * 88.27
26 Anda man&Ni cober * *(36.39) * * * 91.27
27 Cha ndi ga rh * * *(20.36) * * 59.04
28 Del hi * *(29.06) * * * 66.04
29 Da dra &Na ga rHa vel i * * *(32.73) * * 85.04
30 Da ma n&Di u * * * *(51.60) * 86.43
31 La ks ha dweep *(42.11) * * * * 100
32 Pondi cherry *(15.35) * * * * 59.23
33 Goa * * * *(22.52) * 70.9
34 Hi ma cha l Pra des h * * * *(16.31) * 58.5
35 Ja mmu&Ka s hmi r * *(57.02) * * * 90.86
AllIndia * * *(18.02) * * 60.18
Note:Figureinparenthesesshowsthehighestshareoftheindustryinthestates,fordetailoftheIndustrycodeseeAppendixD
Source:NSSOsurveyonemploymentandUnemployment(61stRound)
~48~
mineral products being the fifth in that group. Textiles, being the largest group at the
national level, also was the largest in the case of as many as nine states/UTs.
Otherwise, industry with largest share in employment in a state differed widely. So,
wood and wood products was the largest industry in Himachal Pradesh, Jharkhand,
Orissa, Tripura and Uttarakhand; textile products (wearing apparels, etc.) in
Andaman and Nicobar Islands, Chandigarh, Delhi, Karnataka and Maharashtra; paper
and paper products in Meghalaya; and, non-metallic mineral products in Chhattisgarh
and Rajasthan.
How narrow or diversified is the industrial structure of different states? In

the country as a whole the top five industries accounted for 59 per cent of total
manufacturing employment. In most states the corresponding figure was much larger.
Leaving aside small states and UTs, even some of the larger states, like Bihar,
Gujarat, Karnataka and Orissa have a rather narrow base with the top five industries
contributing over 75 per cent of states total industrial employment. Haryana, Kerala,
Madhya Pradesh, Maharashtra, Uttar Pradesh and West Bengal, on the other side,
have a more diversified industrial structure with the top five industries accounting
for less than 60 per cent of total industrial employment in each of them. All the
North Eastern states have very narrow industrial base with the top 5 industries
accounting for 80 per cent or more of manufacturing employment. Among other
smaller states and UTs, Delhi, Himachal Pradesh, Jammu & Kashmir and Pondicherry
have relatively diversified industrial structure.
TopFiveStates
How are different industries locationally diversified in terms of having
dispersed or concentrated location across states? We have attempted to answer this
question with reference to five most important states in the case of each industry.
Different sets of states feature in the group with largest employment share in
individual industries. In most cases, the states featuring are, of course, the larger
ones.
Taking the share in total employment in an industry claimed by the top five
states as one measure of concentration and dispersal, we find that industry groups
manufacture of coke and petroleum products, electrical and electronic machinery,
~49~
precision instruments, office equipment including computers, motor vehicles and
tobacco products are least dispersed, the five states accounting for 70 to 80 per cent
of employment in each of these industries (Table 21). In case of petroleum product, a
single state, namely Tamil Nadu, accounts for 35 per cent and in the case of office
equipment and computing machinery, Tamil Nadu again accounts for 32 per cent of
total employment. In electrical machinery, Uttar Pradesh dominates with 32 per cent
of total employment. In the case of precision instruments industry 78 per cent of
employment is in the top five states and over one-fourth (27%) in a single state,
Haryana. Recycling is, however, the most geographically concentrated industry the
five top states account for 88 per cent and a single state, West Bengal, 65 per cent of
its total employment.
Wood and wood products and leather products, on the other side, have the
most dispersed location among states, the top five states accounting for 52 per cent
of its total employment. Metal products, general machinery and textiles come next
with a 56 per cent share of the top five states in their total employment. Food
products and non-metallic mineral products are other groups with relatively lower
geographical concentration in their location across the states, with 50 to 60 per cent
employment in the top five states.
Which states feature among the top five in respect of the share of
employment in an industry? Obviously, the larger states have this privilege more
often than the smaller ones. Thus, Maharashtra finds place in this group in respect of
18 (out of 23) industry groups, Uttar Pradesh and West Bengal in respect of 17 and
Tamil Nadu in respect of 16 industries. Andhra Pradesh features among the top five
states in respect of eight and Karnataka five industries. Smaller states and Union
Territories generally do not feature in this group, but we find that Delhi is among
the top five in respect of four industries, paper and paper products, rubber and
plastic products, office equipment and computing machinery, and, radio, televisions
and communication equipment, in the last case accounting for 20 per cent of the
total countrywide employment in that industry.
Among the larger states, Bihar does not feature among the top five states in
any industry, Haryana features in case of only one industry, Punjab, Kerala and
~50~
Table21
TopfiveStatesintermsofNumberofWorkers(Total)200405
IndustryCode
AndhraPradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
MadhyaPradesh
Maharashtra
Orissa
Punjab
Rajasthan
TamilNadu
UttarPradesh
WestBengal
Chhattisgarh
Jharkhand
Uttarakhand
ArunachalPradesh
Assam
Manipur
Meghalaya
Mizoram
Nagaland
Sikkim
Tripura
Andaman&Nicober
Chandigarh
Delhi
Dadra&NagarHaveli
Daman&Diu
Lakshadweep
Pondicheery
Goa
HimachalPradesh
Jammu&Kashmir
TotaloftopFive
15 * * * *(17.22) * 60.02
16 * * * * *(22.11) 71.4
17 * * * *(20.90) * 66.47
18 * * * *(15.41) * 54.79
19 * * * *(15.84) * 67.89
20 * *(15.21) * * * 52.13
21 * * *(23.05) * * 63.88
22 * *(19.29) * * * 62.26
23 * * * *(35.22) * 85.44
24 * * *(27.14) * * 72.6
25 * *(22.66) * * * 68.66
26 * * * * *(23.87) 58.99
27 * * * *(15.56) * 56.24
28 * * * *(17.42) * 56.53
29 * *(16.60) * * * 59.18
30 * * * *(33.04) * 75.93
31 * * * *(32.00) * 72.87
32 * * * * *(20.18) 70.97
33 *(26.82) * * * * 77.57
34 * * *(28.32) * * 76.4
35 * *(18.48) * * * 65.79
36 *(21.19) * * * * 63.37
37 * * *(64.89) * * 84.91

Note:Figureinparenthesesshowsthehighestvalueofthestateintheindustry

~51~
Madhya Pradesh in two each and Rajasthan and Orissa in three each. Among smaller
states, Jharkhand is among the top five in three industries and Chhattisgarh in one
industry. None among the North Eastern states features in top five.
~52~
VI. Industrial Base and Specialisation of States

The descriptive account of the industrial structure of different states given in the
preceding sections is subjected here to some quantitative analysis to measure the
industrial base and specialization of different states. Industrial base of a state has
been identified in terms of the bunch of industries which claim a higher share in the
states industrial structure than in the industrial structure of the country as a whole
and is measured by location quotients of individual industries. Location quotient is
one for an industry if its share in the state is the same as in India, is less than one if
this share is lower and more than one if it is higher than in India. Industries having
quotient value of one or higher are considered to constitute the industrial base of
the state. Location quotients for different industries in different states are given in
Table 22. To simplify the presentation and analysis, we have identified and presented
information on industries with location quotient 1 in each state separately (Table 23).
It must be noted that the location quotients measure industrial base of a state
only relative to the industrial structure of the country. Those industries which have a
higher share in the states than in the countrys industrial structure constitute this
base and these industries need not necessarily be the largest in the state. Location
quotient, in fact, reflects the states relative specialization vis--vis the industrial
structure of the country and is identified in terms of value of the quotients, and
defines industrial base in a relative and not in absolute sense. It also implies that
more industrialised states would have a wider industrial base in terms of having a
larger number of industries with value of location quotients higher than one.
Industrial base of Maharashtra is relatively wide consisting of 16 (out of 23)

industries. Haryana, Delhi and Chandigarh come next with 14, 13 and 11 industry
groups having a higher than one location quotient. Madhya Pradesh has 7 industries
with a greater than one location quotient and Assam 6. Manipur has the narrowest
industrial base with only two industries having a location quotient higher than one,
followed by Arunachal Pradesh and Orissa each with four industries in that category.
Jammu and Kashmir, Nagaland and Andaman also have a small number (5
~53~
Table22
LocationQuotientsofIndustriesinDifferentStates(200405)
Prod
Textiles
Medical
Printing
Recyling
Apparatus
Machinery
PaperProd
MetalProd
Equpments
WoodProd
Electrical&
Instruments
RubberProd
BasicMetals
LeatherProd
Coke&Petro
N.M.M.Prod
gEqupments
Equipmenmt
ChemiclProd
FoodProduct
TobaccoProd
Radio,TVand
MotorVechiles
Furniture/N.E.C
OtherTransport
Communication
Office/Computin
WearingApparel
Precision/Optical
MajorStates
1 Andhra Pa rdes h 1.5 1.8 1.1 0.9 0.4 0.9 0.5 0.8 1.5 0.6 0.4 1.1 0.9 0.7 0.7 0.6 0.2 1.3 0.0 0.1 1.1 0.6 0.4
2 Bi ha r 1.2 2.5 0.2 1.2 0.6 1.9 0.0 0.2 0.0 0.2 0.1 1.7 0.1 0.3 0.6 0.0 0.0 0.0 0.0 0.1 1.8 0.7 0.0
3 Gujra t 0.6 0.1 1.0 1.0 1.1 0.5 0.8 0.8 2.1 2.6 2.0 0.6 1.4 0.9 1.1 1.0 1.7 0.0 0.3 0.0 0.1 2.9 0.0
4 Ha rya na 0.6 0.0 0.7 1.1 1.3 0.5 1.5 1.0 0.0 1.6 1.9 1.0 1.0 2.0 2.8 0.0 1.2 1.3 11.6 6.4 1.2 0.8 0.0
5 Ka rna ta ka 0.9 1.9 0.6 1.6 0.7 1.3 0.6 2.2 0.6 0.6 0.4 0.4 0.6 0.9 1.3 0.6 1.1 2.3 0.0 1.1 0.9 0.6 0.0
6 Kera l a 1.9 0.5 1.0 1.3 0.2 1.0 1.5 1.3 0.4 0.9 1.1 0.4 0.1 1.0 0.5 2.1 0.4 0.9 1.0 0.1 1.0 1.3 1.4

7 Ma dhya Pra des h 0.9 3.7 0.3 0.8 0.4 1.1 0.0 0.5 0.0 1.2 0.4 1.1 0.6 0.8 0.5 1.3 1.3 0.3 0.0 1.6 0.2 0.6 0.2
8 Ma ha ra s tra 1.1 0.2 0.6 1.2 1.1 0.6 1.1 1.8 1.4 1.4 2.2 0.9 0.8 1.6 1.6 1.5 1.1 1.8 0.4 2.7 1.8 1.5 0.0
9 Ori s s a 0.9 0.8 0.5 0.3 0.0 4.0 0.8 0.2 0.0 0.1 0.3 2.1 2.3 0.6 0.2 0.0 0.1 0.0 0.0 0.0 1.0 0.4 0.0
10 Punja b 0.9 0.0 1.3 1.1 1.0 0.7 0.9 0.8 0.0 0.5 1.8 0.7 1.4 1.5 3.7 0.4 0.4 1.1 0.8 1.0 7.0 0.5 0.8
11 Ra ja s tha n 0.7 0.2 1.2 0.9 2.2 0.8 0.8 0.8 1.1 0.4 0.5 1.9 0.2 1.2 0.5 0.0 0.3 1.6 3.3 0.2 0.7 1.7 0.2
12 Ta mi l Na du 0.7 0.8 1.7 0.8 1.4 0.7 0.8 1.4 3.2 2.4 0.7 0.5 0.5 0.9 0.9 3.0 0.5 0.0 0.4 1.8 0.5 0.8 0.3
13 Utta rPra des h 1.1 0.6 1.4 1.0 1.0 0.8 1.5 0.6 0.0 0.4 0.2 1.5 1.0 1.1 1.0 0.0 2.1 0.6 0.0 0.4 0.3 0.6 0.2
14 Wes tBenga l 1.1 2.1 1.0 0.9 1.4 0.9 1.0 0.6 0.4 0.5 1.6 0.6 1.3 0.6 0.5 0.5 1.1 0.6 1.7 0.2 1.3 0.9 6.0
NewStates
15 Chha tti s ga rh 1.4 0.9 0.1 0.8 0.2 1.6 0.2 1.1 0.0 0.2 0.0 2.3 7.0 1.8 0.3 0.0 0.0 1.5 0.0 0.2 0.6 0.6 3.7
16 Jha rkha nd 0.7 2.1 0.5 0.3 1.1 2.0 0.0 0.2 4.2 0.0 0.3 2.1 4.0 0.8 0.7 2.0 0.2 0.0 0.0 3.6 0.0 0.3 4.2
17 Utta ra kha nd 1.2 0.0 0.1 1.3 0.0 2.1 0.6 2.4 0.0 0.9 0.5 0.9 0.6 2.6 2.7 0.0 1.5 8.2 0.4 2.3 0.0 0.5 0.3
~54~
Table22
LocationQuotientsofIndustriesinDifferentStates(200405)
Prod
Textiles
Medical
Printing
Recyling
Apparatus
Machinery
PaperProd
MetalProd
Equpments
WoodProd
Electrical&
Instruments
RubberProd
BasicMetals
LeatherProd
Coke&Petro
N.M.M.Prod
gEqupments
Equipmenmt
ChemiclProd
FoodProduct
TobaccoProd
Radio,TVand
MotorVechiles
Furniture/N.E.C
OtherTransport
Communication
Office/Computin
WearingApparel
Precision/Optical
NorthEasternStates
18 Aruna cha l Pra des h 3.2 0.0 0.8 0.4 0.7 1.3 0.0 0.7 0.0 0.0 0.7 0.0 6.1 0.0 0.0 0.0 0.0 0.0 0.0 12.5 0.0 0.6 0.0
19 As s a m 1.7 0.0 0.7 0.6 0.0 2.6 3.2 0.8 0.6 0.3 0.0 0.9 0.2 1.2 0.0 0.0 0.2 0.3 0.0 0.0 0.0 2.0 3.6
20 Ma ni pur 0.5 0.0 3.2 1.2 0.0 0.7 0.0 0.8 0.0 0.3 0.0 0.2 0.7 0.2 0.0 0.0 0.3 0.0 0.0 0.0 0.0 1.0 0.0
21 Megha l a ya 1.2 0.0 1.8 0.5 0.0 1.6 0.0 0.3 2.9 0.0 0.1 2.2 0.2 0.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 1.3 0.0
22 Mi zora m 1.2 0.4 0.3 2.4 0.0 0.7 0.0 1.3 0.0 0.0 0.0 0.1 0.0 1.5 0.0 0.0 0.0 3.2 0.0 0.0 0.0 3.5 0.0
23 Na ga l a nd 1.4 0.0 3.1 0.0 0.0 1.7 0.0 1.1 0.0 0.0 0.0 0.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 0.0
24 Si kki m 2.1 0.0 0.2 1.6 0.0 1.2 0.0 1.2 0.0 2.1 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.8 0.0
25 Tri pura 2.5 0.3 0.2 0.7 0.0 3.3 0.3 0.2 0.0 0.2 0.4 0.5 0.9 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0
UnionTerritories
26 Anda ma n&Ni cober 1.2 0.0 0.0 2.7 0.0 1.2 0.0 8.1 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.9 2.1 0.0
27 Cha ndi ga rh 1.3 0.0 0.4 1.5 0.0 0.5 2.1 2.9 0.0 1.2 3.6 0.0 1.5 1.8 4.1 0.0 3.8 0.0 17.9 0.0 0.0 0.8 0.0
28 Del hi 0.2 0.0 0.8 2.2 2.4 0.2 5.5 1.9 0.0 0.2 3.2 0.0 0.1 1.4 2.1 6.2 2.3 10.0 4.4 0.7 1.5 1.3 0.2
29 Da dra &Na ga rHa vel i 0.2 0.0 1.4 0.1 0.0 0.0 2.9 0.0 6.5 2.9 23.4 0.0 6.4 0.5 2.1 6.1 0.5 0.0 0.0 2.4 0.0 0.0 0.0
30 Da ma n&Di u 0.5 0.0 0.1 0.7 0.0 0.0 0.9 1.2 0.0 4.3 36.9 0.0 0.0 0.5 1.0 0.0 3.2 0.0 0.0 0.0 1.2 0.3 0.0
31 La ks ha dweep 4.1 0.0 0.3 2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.9 2.1 0.0
32 Pondi cheri 1.5 0.1 0.7 1.0 3.4 0.6 2.1 1.4 0.0 1.7 1.5 1.1 0.0 1.2 0.7 0.0 4.6 0.0 0.0 0.0 1.4 0.9 0.0
33 Goa 1.2 0.0 0.3 0.3 0.0 0.2 0.0 8.0 0.0 6.1 0.0 0.1 3.2 0.5 1.5 0.0 2.4 0.0 11.6 0.5 5.5 2.0 0.0
34 Hi ma cha l Pra des h 1.2 0.0 0.6 1.0 0.3 1.7 2.6 0.8 0.0 1.7 0.1 0.7 3.6 0.8 1.2 0.0 0.0 0.0 23.6 4.1 0.0 0.7 0.0
35 Ja mmu&Ka s hmi r 0.9 0.0 3.2 0.6 0.1 1.5 1.1 0.3 0.0 0.1 0.2 0.2 0.4 0.5 0.1 0.0 0.9 0.2 4.5 0.0 0.0 0.1 2.7
~55~
Table23
IndustrialBaseofDifferentStates(IndustrieswithLocationQuotients1)200405
Prod
Textiles
Apparel
Printing
Medical
Wearing
Recyling
Apparatus
Machinery
WoodProd
PaperProd
MetalProd
Equpments
Coefficients
Electrical&
RubberProd
N.M.M.Prod
BasicMetals
gEqupments
LeatherProd
Coke&Petro
lInstruments
Equipmenmt
FoodProduct
ChemiclProd
TobaccoProd
Radio,TVand
Specialization
MotorVechiles
Furniture/N.E.C
OtherTransport
Office/Computin
Communication
MajorStates Precision/Optica
1 Andhra Pa rdes h 0.14 1.46 *(1.85) 1.09 1.54 1.05 1.29 1.10
2 Bi ha r 0.33 1.19 *(2.48) 1.20 1.95 1.74 1.80
3 Gujra t 0.25 1.15 2.10 2.58 1.99 1.37 1.13 1.69 *(2.92)
4 Ha ryana 0.25 1.08 1.29 1.46 1.61 1.91 1.04 1.04 2.00 2.83 1.24 1.25 *(11.57) 6.39 1.18
5 Ka rnataka 0.22 1.93 1.62 1.25 *(2.20) 1.26 1.13 2.27 1.10
6 Kera l a 0.13 1.88 1.31 1.03 1.49 1.31 1.09 *(2.10) 1.03 1.28 1.40
7 Madhya Pra des h 0.26 *(3.66) 1.05 1.19 1.09 1.35 1.32 1.63
8 Maharas tra 0.19 1.06 1.22 1.13 1.06 1.84 1.41 1.45 2.16 1.56 1.58 1.51 1.07 1.81 *(2.70) 1.76 1.45
9 Ori s s a 0.41 *(4.00) 2.09 2.32 1.02
10 Punja b 0.22 1.33 1.07 1.81 1.37 1.46 3.73 1.10 1.03 *(6.98)
11 Ra ja s tha n 0.21 1.16 2.25 1.05 1.95 1.20 1.61 *(3.29) 1.75
12 Ta mi l Na du 0.21 1.68 1.39 1.39 *(3.18) 2.45 2.98 1.78
13 Utta rPrades h 0.15 1.12 1.35 1.00 1.03 1.49 1.55 1.01 1.13 *(2.07)
14 Wes tBenga l 0.14 1.08 2.06 1.02 1.36 1.64 1.27 1.09 1.70 1.32 *(6.04)
NewStates
15 Chhatti s ga rh 0.32 1.36 1.61 1.06 2.30 *(7.00) 1.77 1.46 3.70
16 Jha rkhand 0.38 2.06 1.09 2.01 4.19 2.13 3.99 2.02 3.64 *(4.23)
17 Utta ra kha nd 0.32 1.18 1.31 2.06 2.36 2.57 2.68 1.49 *(8.19) 2.30

~56~
Table23
IndustrialBaseofDifferentStates(IndustrieswithLocationQuotients1)200405
Prod
Textiles
Medical
Printing
Recyling
Apparatus
Machinery
WoodProd
PaperProd
MetalProd
Equpments
Coefficients
Electrical&
Instruments
RubberProd
N.M.M.Prod
BasicMetals
gEqupments
LeatherProd
Coke&Petro
Equipmenmt
FoodProduct
ChemiclProd
TobaccoProd
Radio,TVand
Specialization
MotorVechiles
Furniture/N.E.C
OtherTransport
Office/Computin
Communication
WearingApparel
NorthEasternStates Precision/Optical
18 Arunachal Prades h 0.48 3.20 1.27 6.15 *(12.50)
19 As s am 0.35 1.66 2.63 3.22 1.18 2.04 *(3.58)
20 Mani pur 0.42 *(3.22) 1.15
21 Meghal a ya 0.35 1.25 1.82 1.56 *(2.87) 2.16 1.32
22 Mi zoram 0.45 1.21 2.39 1.31 1.50 3.22 *(3.49)
23 Na ga l a nd 0.51 1.41 3.13 1.71 1.09 1.14
24 Si kki m 0.45 2.08 1.59 1.20 1.16 2.05 2.03 2.81
25 Tri pura 0.47 2.51 *(3.29) 2.16
UnionTerritories
26 Anda ma n&Ni cober 0.55 1.21 2.71 1.19 8.10 *(10.90) 2.11
27 Cha ndi garh 0.39 1.28 1.51 2.11 2.88 1.25 3.63 1.46 1.83 4.10 3.83 *(17.86)
28 Da dra &NagarHa vel i 0.61 1.39 2.92 6.51 2.90 *(23.38) 6.40 2.10 6.09 2.36
29 Da man&Di u 0.62 1.25 4.26 *(36.86) 3.24 1.18
30 Del hi 0.38 2.16 2.37 5.48 1.92 3.21 1.36 2.09 6.18 2.31 *(10.00) 4.35 1.51 1.27
31 Laks ha dweep 0.63 4.09 0.25 2.24 *(8.86) 2.12
32 Pondi cheri 0.22 1.49 1.00 3.41 2.12 1.42 1.66 1.49 1.12 1.22 *(4.56) 1.42
33 Goa 0.30 1.20 8.02 6.11 3.19 1.47 2.43 *(11.64) 5.48 2.01
34 Hi ma cha l Prades h 0.29 1.23 1.68 2.64 1.70 3.64 1.24 *(23.61) 4.09
35 Jammu&Ka s hmi r 0.46 3.16 1.53 1.10 *(4.54) 2.73
Locationquotient(L.Q.)iscalculatesas andSpecializationCoefficient(S.Q.)as
whereV=Employment,i=ithindustry,j=jthregion,N=NationalAggregateInbothequation~
~57~
or 6) of industries in which each one of them specializes. But what is surprising is
that some larger states like Andhra Pradesh (7) and Rajasthan (8) also have similarly
narrow industrial bases. What is most surprising, however, is the fact that
Pondicherry, a small UT, has as many as 11 industries constituting its industrial base,
while Tamil Nadu a relatively more industrialised state has only 7 industries and the
most industrialised state Gujarat only 8 industries constituting their industrial base.
Let us also see how similar or different the industrial structure of a state is
vis--vis that of the country as a whole. For this purpose, shares of different
industries in the total industrial employment in a state are compared with the
corresponding shares at the national level. The differences between the two are
summed up in a single statistic: coefficient of specialization. Value of this coefficient is
zero if the industrial structure of the state is exactly similarly diversified as that of
the country as a whole and one if that state has one industry and that industry is
present in that state only. In between, the values of coefficient show the degrees of
specialization of states vis--vis the industrial structure of the country.
Coefficients of specialization for different states are presented in Table 23

(first column). If we take the value of specialization coefficient lower than 0.3 as
indicating significant similarity of the states industrial structure with that of the
country as a whole, thirteen states (most of them major states) fall in this category.
Kerala has the lowest degree of specialization with the value of specialization
quotient at 0.13, followed by West Bengal and Andhra Pradesh (with SQ=0.14),
Uttar Pradesh (0.15), Maharashtra (0.19), Rajasthan, Tamil Nadu (0.21) and Punjab
and Karnataka (0.22), Haryana and Gujarat (0.25) and Himachal Pradesh (0.24) and
Madhya Pradesh (0.26). Bihar, Chhattisgarh, Jharkhand, and Uttarakhand have a
moderate degree of specialization with coefficient values between 0.30 and 0.40.
Only Orissa has a coefficient which is higher than 0.40 (0.41), which is also the
highest among all the states except three North Eastern statesall of which have a
higher degree of coefficient of specialization. Other smaller states, Himachal Pradesh
and Goa have relatively low coefficient of specialization. UTs have high specialization:
Lakshadweep and Dadra and Nagar Haveli show a coefficient of specialization at 0.63
and 0.62 respectively and also Daman and Diu (0.62), Andaman and Nicobar (0.55).
Delhi and Chandigarh have relatively low coefficient of specialization. Among smaller
~58~
states, Goa and Himachal Pradesh have low coefficient of specialization. In general, it
may be concluded that the degree of specialization is rather low in most of the states
and UTs in India, as their industrial structures are not very different from that of the
country as a whole.
~59~
VII. Interstate Productivity

DifferencesinManufacturing
As was noted earlier while comparing shares of gross value added and
employment of different states in all-India totals, there are wide differences in
productivity in manufacturing among different states. In this section we attempt a
comparison of productivity, defined in terms of gross value added per worker,
among states, in aggregate manufacturing and in individual 2-digit product groups.
Data constraints do not permit such comparison for the entire manufacturing sector,
but only for organised and unorganised sectors separately.
OrganisedSector
ExtentofDifferences
Per worker productivity in the organised manufacturing sector varied
between Rs. 29,000 in Manipur and Rs. 8,20,000 in Maharashtra in 200001. Goa
with a figure of Rs. 5.39 lakh, Madhya Pradesh (Rs. 3.02 lakh), Himachal Pradesh
(Rs. 2.87 lakh) and Gujarat (Rs. 2.16 lakh) were other high productivity states. In
Andhra Pradesh, Kerala, West Bengal, Nagaland and Jammu and Kashmir, GVA per
worker was less than Rs. 1 lakh. All UTs had relatively high GVA per worker, the
highest at Rs. 5.39 lakh in Dadra and Nagar Haveli and lowest in Chandigarh (Rs.
1.93 lakh) and Delhi (Rs. 1.90 lakh). The all-India average was Rs. 1.61 lakh (Table
24).
Similar pattern is seen in 200607, the latest year for which comparable data
are available, with Manipur at the lowest level (GVA per worker at Rs. 33,000) and
Maharashtra at the top (GVA per worker at Rs. 17.66 lakh) (Table 25). Goa (Rs.
9.59 lakh), Gujarat (Rs. 3.64 lakh) and Himachal Pradesh (6.05) continue to be in the
high productivity states, but Madhya Pradesh slides down to below average, while
Orissa, Bihar, Karnataka and Rajasthan climb up to the group of states with per
worker value added higher than the national average (Rs. 2.55). Kerala (Rs. 0.67
lakh) followed by Uttar Pradesh (Rs. 0.97 lakh) are at the bottom; Punjab, West
~60~
Table24
PerWorkerProductivityofOrganisedManufacturinginRs.Lakh(200001)
IndustryCode
AndhraPradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
Maharashtra
MadhyaPradesh
Orissa
Punjab
Rajasthan
TamilNadu
UttarPradesh
WestBengal
Chhattisgarh
Jharkhand
Uttarakhand
Assam
Manipur
Meghalaya
Nagaland
Tripura
A&NIslands
Chandigarh
Delhi
DadarandNagerHaveli
2021 0.59 1.27 1.1 1.22 1.18 0.34 7.28 1.43 0.49 1.09 0.9 0.8 1.04 0.4 0.43 1.56 1.16 0.57 0.94 0.74 0.57 0.58 N.E. 1.01 3.26 N.E.
22 0.2 1.14 1.4 1.69 4.54 0.9 1.04 0.89 0.5 1.04 1.29 1.48 2.53 1.84 0.41 0.18 0.76 0.9 N.E. N.E. 0.28 32.24 N.E. 3.85 1.47 0
23+24+25 1.04 0.28 1.22 0.68 1.37 0.82 4.55 2.08 0.15 1.18 1.08 1.02 0.91 0.56 1 0.54 0.06 0.41 N.E. N.E. N.E. N.E. N.E. N.E. 0.56 4.84
26 0.45 1.09 1.45 0.59 0.75 6.13 3.13 0.44 1.18 1.95 0.87 1.28 1.52 2.44 N.E. 0.92 N.E. N.E. N.E. N.E. 0.55 N.E. N.E. 2.56 2.72
27 0.38 0.2 0.61 0.66 1.56 0.21 7.11 0.56 0.6 0.44 0.48 0.45 0.68 0.33 0.23 0.29 0.41 0.17 0.37 N.E. 0.47 0.25 N.E. 0.84 0.81 1.49
28 1.41 1.26 1.34 1.42 1.47 1.2 7.03 1.12 1.28 0.57 0.94 2.18 1.33 1.73 0.38 1.4 2.24 2.03 N.E. N.E. 0.35 0.5 N.E. 2.33 2.48 2.33
29 0.58 0.52 0.55 1.01 0.69 2.87 0.41 0.92 N.E. 0.68 0.94 0.49 0.63 0.96 0.3 N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. N.E. 1.59 N.E.
30 1.82 0.52 3.88 1.14 2.28 2.64 19.79 3.3 0.76 2.52 6.44 1.12 2.64 2.03 1.57 0.78 2.56 0.9 N.E. N.E. N.E. 0.36 N.E. 4.25 1.69 9.76
31 2.49 1.4 4.26 2.08 2.03 3.54 33.16 2.68 1.82 0.74 3.89 3.09 3.69 0.82 1.32 0.24 4.35 6 N.E. N.E. N.E. 1.02 N.E. 0.62 1.15 5.35
32 1.65 0.28 1.61 0.75 1.58 0.65 2.39 5.85 1.55 0.72 2.42 2.05 0.93 0.91 4.35 0.38 0.25 0.23 0.19 0.56 0.15 0.16 N.E. 0.93 0.72 4.35
33 2.45 3.47 3.74 2.87 3.03 2.62 1.21 19.79 3.16 0.58 2.58 1.17 3.71 1.07 2.74 3.57 0.91 1.12 N.E. 3.18 N.E. N.E. N.E. 2.08 0.85 3.13
34 0.76 0.72 0.86 0.94 1.61 0.4 10.08 0.82 0.68 0.8 2.98 1.54 1.09 0.95 0.27 0.75 0.55 0.49 N.E. N.E. 0.58 0.34 N.E. 1.46 1.47 2.95
3536 2.13 1.46 1.79 2.69 1.99 1.49 16.59 2.32 1.28 1.68 1.8 1.84 2.08 1.56 0.95 1.62 2.88 1.46 N.E. N.E. N.E. 1.66 N.E. 1.92 1.41 6.09
37 1.08 0.66 0.53 2.5 2.05 1.57 16.2 1.46 0.67 0.67 0.45 2.96 2.11 0.59 0.74 0.6 N.E. 0.36 N.E. N.E. N.E. N.E. N.E. 0.76 1.57 N.E.
38 0.9 0.12 0.99 1.73 1.67 0.8 35.59 0.63 N.E. 0.62 1.22 1.64 1.29 1.85 0.23 N.E. 1.91 N.E. N.E. N.E. N.E. N.E. N.E. 0.98 1.38 1.77
All 0.87 1.8 2.16 1.76 1.56 0.95 8.2 3.02 1.72 1.07 2.03 1.3 1.65 0.9 2.29 2.08 1.9 1.02 0.29 1.16 0.33 1.56 N.E. 1.9 1.93 5.39

Note:Noteestimated
~61~
Table25
PerWorkerProductivityofOrganisedManufacturinginRs.Lakh(200607)
IndustryCode
AndhraPradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
Maharashtra
MadhyaPradesh
Orissa
Punjab
Rajasthan
TamilNadu
UttarPradesh
WestBengal
Chhattisgarh
Jharkhand
Uttarakhand
Assam
Manipur
Meghalaya
Nagaland
Tripura
A&NIslands
Chandigarh
Delhi
DadarandNagar
Haveli
DamanandDiu
Punducherry
Goa
HimachalPradesh
Jammu&Kashmir
India
2021 1.12 1.1 1.36 1.73 1.75 0.34 6.6 0.86 0.53 1.1 1.74 0.86 0.8 0.57 0.61 1.74 1.08 0.51 0.89 0 0.78 1.62 0.07 0.98 2.17 18.31 1.01 2.4 11.97 2.98 0.86 1.25
22 0.21 2.12 1.51 1.78 11.47 0.09 1.76 1.41 0.23 7.27 2.69 2.19 1.72 2 0.36 0.38 0.03 2.74 N.E. N.E. 0.37 7.12 N.E. 0.37 1.12 7.39 2.46 2.75 5 1.43 0.69 1.11
23+24+25 1.09 0.53 1.45 1.22 2.22 0.99 4.53 2.41 0.54 2.16 1.86 1.5 1.14 0.64 0.99 N.E. 2.26 0.43 N.E. N.E. N.E. N.E. N.E. N.E. 0.75 5.21 2.95 0.86 N.E. 2.55 1.3 1.52
26 0.4 0.74 1.39 1.28 0.82 1.01 45.85 5.78 0.63 1.16 1.61 0.53 0.47 1.31 0.56 0.74 5.66 0.71 N.E. N.E. N.E. N.E. N.E. 1.41 1.82 5.38 1.19 14.12 2.23 0.41 0.92
27 0.78 0.34 0.69 0.26 1.01 0.41 12.92 0.44 1.44 0.5 N.E. 0.56 0.39 1.02 0.44 0.65 0.75 0.29 0.29 N.E. 1.2 0.71 0.38 0.49 1.22 2.47 1.39 1.49 1.86 0.24 0.76
28 2.14 0.72 1.38 1.71 1.83 1.99 12.92 1.06 1.99 1.65 N.E. 1.49 0.71 1.63 0.58 1.27 2.21 2.38 N.E. 1.59 0.48 0.84 N.E. 3.03 2.03 2.5 2.15 1.24 3.59 4.21 1 1.83
29 0.42 1.25 1.26 1.13 1.83 1.58 2.25 0.85 N.E. 0.84 0.72 0.75 0.28 1.47 0.36 N.E. 2.76 N.E. N.E. N.E. N.E. N.E. N.E. N.E. 1.25 N.E. N.E. 0.76 N.E. 3.32 2.09 0.96
30 4.07 3.83 5.15 3.09 3.19 2.4 21.31 2.97 N.E. 2.66 4.02 0.84 1.62 4.09 1.03 5.77 4.78 4.86 N.E. 8.06 N.E. 5.24 N.E. N.E. 3.81 6.6 2.67 3.95 14.68 13.37 4.76 3.83
31 6.59 1.95 22.39 2.17 3.45 N.E. 12.53 1.83 1.92 1.1 1.99 4.37 2.14 5.75 11.8 3.57 2.81 13.16 N.E. N.E. N.E. 0 N.E. 2.29 1.27 3.86 1.84 1.32 10.35 1.81 0.55 10.4
32 2.01 0.46 2.02 0.73 3.3 1.06 3.27 4.27 1.61 0.63 3.34 2.26 0.33 1.25 5.05 0.93 1.19 0.44 0.27 16.76 0.23 0.28 N.E. 1.01 0.73 2.82 1.56 1.55 6.53 8.22 1.36 1.97
33 5.8 4.62 3.27 3.57 9.33 0.96 5.06 11.82 5.17 0.89 3.21 1.92 1.83 1.81 6.44 4.74 2.63 3.26 N.E. 3.45 N.E. 7.85 N.E. 1.21 0.67 1.85 2.15 1.1 13.05 1.89 2.69 4.07
34 1.04 1.27 2.05 1.26 1.68 0.55 13.59 0.35 0.46 0.67 1.11 1.82 0.34 0.98 1.46 1.52 1.15 0.36 N.E. N.E. N.E. 2.37 N.E. 0.48 1.2 1.5 1 1.63 5.07 1.34 0.71 1.45
3536 3.46 6.35 2.57 2.82 4.39 2.01 22.55 1.72 2.22 1.88 5.52 3.18 1.32 2.24 1.25 13.9 4.6 1.05 N.E. N.E. N.E. 2.13 N.E. 2.19 1.52 5.74 8.77 12.33 6.69 5.22 3.59 3.56
37 1.21 2.92 2.36 4.75 3.02 2.05 69.45 1.33 0.23 1.07 3.57 4.55 1.6 1.33 0.75 1.91 1.39 0.53 N.E. N.E. N.E. N.E. N.E. 0.75 1.08 N.E. 2.15 3 1.98 1.27 1.28 3.89
38 1.25 N.E. 1.53 1.36 1.39 2.5 28.93 0.18 N.E. 0.9 1.81 1.64 0.93 2.18 0.25 N.E. 8.03 N.E. N.E. N.E. N.E. N.E. N.E. 0 1.14 1.98 2.05 2.6 3.46 7.06 0.41 1.89
All 1.74 2.83 3.64 2.51 2.62 0.67 17.66 2.39 2.96 1.36 2.64 1.45 0.97 1.44 4.39 3.96 3.18 1.93 0.33 9.47 0.88 0.72 8.95 1.49 1.59 4.63 3.5 3.26 9.59 6.05 2.18 2.55
Note:Noteestimated
~62~
Bengal and Tamil Nadu being only marginally better. All the three new states were
among the better performers in terms of value added per worker in 200607, as in
200001. Among the North Eastern states, Meghalaya has gone up the ladder being
the state with the third highest productivity (Rs. 9.47 per worker) among all the
states after Maharashtra and Goa in 200607; it was among the low productivity
states in 200001. Tripura and Nagaland are at the bottom. Among UTs, Dadra and
Nagar Haveli and Daman and Diu are in the high productivity and Delhi and
Chandigarh in low productivity categories.
TheCompositionEffect
Overall productivity differences among the states are partly due to varying
composition of the manufacturing sector and partly due to differences in productivity
in the same product groups. States with larger share of high productivity industries in
their product structure would have higher aggregate productivity and vice versa. The
share of five industries with the highest all-India productivity (viz. Chemical products,
basic metals, transport equipment, rubber and plastic products and machinery) was
the highest in Meghalaya (85.18%) in 200607 (Table 26). The state was also among
the high productivity category (third highest). Goa and Himachal Pradesh also were
among the top five states in terms of both per worker productivity and the share of
the five industries with higher productivity. Maharashtra, Gujarat and Uttarakhand
were other states with large (>73%) share of the top five industries; they also had
high aggregate productivities, though not in the same order in respect of the two
variables. Bihar, Kerala, Punjab, Nagaland and Tripura all have a low value added per
worker, in organised manufacturing, of less than Rs. 1 lakh per year; they also have
relatively small share (between 35 to 45, and as low as 7% in Nagaland) of the five
high productivity industries. But there are some outliers in this pattern. Chhattisgarh
has high productivity (Rs. 4.39 lakh), but only a small share (12%) in the top five
industries. Jharkhand shows similar pattern with a high figure of Rs. 3.96 lakh in
productivity and a low (36%) share in five high productivity industries. Manipur
generates 71 per cent of its value added from the top five high productivity
industries, but its overall productivity is the lowest (Rs. 33,000).
~63~
Table26
AverageShareofFiveHighestProductivityIndustriesatallIndialevelintheGrossValue
AddedinOrganisedManufacturing(200607)
MajorStates 30 31 32 3536 37 Total
AndhraPradesh 19.70 12.93 10.40 14.64 1.55 59.23
Bihar 3.08 6.25 4.06 14.70 4.56 32.65
Gujarat 28.20 32.78 4.34 8.39 1.55 75.26
Haryana 4.41 1.90 1.23 14.01 47.25 68.80
Karnataka 6.41 4.29 4.53 21.54 7.45 44.22
Kerala 17.49 2.20 8.00 14.23 5.41 47.33
MadhyaPradesh 13.70 5.33 16.05 9.97 2.98 48.03
Maharashtra 9.37 35.26 1.55 12.89 14.31 73.38
Orissa 0.97 2.34 6.32 2.04 0.01 11.68
Punjab 7.24 2.79 6.25 11.33 8.34 35.96
Rajasthan 9.40 2.28 26.14 14.38 3.30 55.50
TamilNadu 4.17 7.28 4.80 14.14 19.15 49.54
UttarPradesh 14.39 8.01 2.49 17.14 8.55 50.59
WestBengal 14.26 11.11 2.26 10.81 3.24 41.69
NewStates
Chattisgarh 0.59 1.57 8.50 1.16 0.15 11.97
Jharkhand 3.02 9.60 3.47 15.03 4.68 35.80
Uttarakhand 34.67 4.20 1.61 32.49 0.53 73.50
NorthEasternStates
ArunachalPradesh N.E. N.E. N.E. N.E. N.E.
Assam 14.94 53.97 4.00 1.05 0.02 73.99
Manipur 0.00 0.00 71.08 0.00 0.00 71.08
Meghalaya 3.76 0.00 81.42 0.00 0.00 85.18
Mizoram N.E. N.E. N.E. N.E. N.E.
Nagaland 0.00 0.00 7.06 0.00 0.00 7.06
Sikkim N.E. N.E. N.E. N.E. N.E.
Tripura 7.32 0.00 32.38 1.14 0.00 40.84
A&NIslands 0.00 0.00 0.00 0.00 0.00 0.00
Chandigarh 0.00 1.20 3.41 34.55 3.18 42.33
Delhi 15.10 2.98 0.14 12.89 4.96 36.07
DadarandNagarHaveli 25.04 17.03 1.24 17.14 0.00 60.44
DamanandDiu 12.49 16.63 0.22 40.62 0.42 70.38
Lakshadweep N.E. N.E. N.E. N.E. N.E.
Pondicherry 44.02 6.93 2.11 8.05 2.29 63.40
Goa 21.23 4.75 4.12 45.61 4.97 80.67
HimachalPradesh 52.13 1.37 9.06 16.11 0.42 79.09
Jammu&Kashmir 48.37 0.77 4.57 10.52 0.26 64.50
India 13.21 17.73 5.16 13.38 9.94 59.42
Source:SameasTable1
DifferencesinIndividualIndustries
Thus, while a good part of the interstate productivity differentials in the
organised manufacturing as a whole could be attributed to the differences in the
structure of industries, part of them is also because there are interstate differences
in productivity even in the same product groups. Thus, in chemical products the
~64~
group with highest productivity (Rs. 10.40 lakh) on an all-India basis, generated a
value added of Rs. 12.53 lakh per worker in Maharashtra and Rs. 10.35 lakh in Goa,
the figure was as low as Rs. 1.10 lakh for Punjab and Rs. 0.55 lakh for Jammu and
Kashmir (Table 25). Similarly, basic metals with the next highest figure (Rs. 4.07
lakh) of value added per worker in aggregate has a figure as high as Rs. 13.05 lakh in
Goa, Rs. 11.82 lakh in Madhya Pradesh and Rs. 9.33 lakh in Maharashtra, but only
Rs. 93,000 in Kerala, Rs. 89,000 in Punjab and Rs. 67,000 in Delhi.
Highest productivity in any industry in any state is in transport equipment in

Maharashtra (Rs. 69.45 lakh), but it has as low a productivity as Rs. 23,000 in
Orissa and Rs. 53,000 in Assam. Industry with lowest productivity (Rs. 76,000) on
an all-India basis viz. wood products, shows a variation between less than Rs. 30,000
in Haryana, Manipur and Jammu and Kashmir and as high as Rs. 12.92 lakh in
Maharashtra.
Maharashtra had the highest value added per worker in 10 out of the 15
industry groups in which the organised manufacturing was divided. It occupied
second place in two cases. Goa topped in two and was at second place in 6
industries. Assam, Bihar, Andhra Pradesh, Uttar Pradesh, Madhya Pradesh, Orissa
and Chhatisgarh featured as the states with the lowest or second lowest value added
per worker in case of several industry groups. Thus, it appears that besides the
difference in composition of industries, there are significantly larger variations across
the states in their regional social, economic, technological and labour market
characteristics that produce wide variations in productivity in an industry.
TechnologyandProductivityDifferentials
Does technological variation explain interstate differences in productivity in
an industry? Taking capital intensity, measured in terms of capital per worker as the
indicator of technology, we attempt to investigate this question. That different
industries use different levels of technology in production is very well known. It
could also be reasonably assumed that a high technology industry would be so,
irrespective of its location in one state or the other. Yet, there could be variations
from state to state due, first, to the items within the same product growth that a
state specializes in production, and second, possibly because of the choice of
~65~
technologylabour versus capital intensivethat the producer in a state may choose
to adopt depending on the labour market situation. A look at the figures of capital
per worker (Rs. lakh) in different industries and states (Table 27) suggests: (i)
industries that have high capital intensity show that characteristic in a relative sense
across the states and similar is the case with industries with low capital intensity; and
(ii) yet, these are significant variations in capital intensity in individual industries
across the states.
Thus, industry with highest all-India value of capital per worker (Rs. 13.69
per lakh), namely, chemical products, is either the industry with highest capital
intensity or among the top few industries in this respect in most states. Similar is the
case with the industry with the next highest capital intensity, namely basic metals.
Even in a state with very low overall capital intensity (Rs. 1.08 lakh), namely Tripura,
capital intensity in these two industries (chemical products and basic metals) is as
high as Rs. 30 lakh and Rs.54 lakh respectively. Beverages and leather products
have the lowest capital intensity on an average; they also are among industries with
lowest capital per worker in most of the states. Even in states with high overall
capital intensity like Chhattisgarh (Rs. 14.67 lakh), Jharkhand (Rs. 13.43 lakh),
Orissa (Rs. 8.33 lakh) and Gujarat (Rs. 7.82 lakh), capital intensity in beverages is
low at Rupees 1.15, 1.26, 0.56 and 0.97 lakh respectively and in leather products Rs.
0.54 lakh in Chhatisgarh and Rs. 1.26 lakh in Gujarat (industry does not appear in
Jharkhand and Orissa).
Yet, large variations are observed in capital intensity in the same industry
among the states. In the industries mentioned above, for example, it varied between
Rs. 1.10 lakh in Punjab to Rs. 45.26 lakh in Maharashtra in chemical products,
between Rs. 81.82 lakh in Punjab and Rs. 24.98 lakh in Madhya Pradesh in basic
metals, between Rs. 0.20 lakh in Andhra Pradesh and to Rs. 9.49 lakh in
Uttarakhand in beverages and relatively less between Rs. 0.29 lakh in Bihar to Rs.
4.33 lakh in Uttarakhand. Capital intensity seems to explain productivity differences
among states to a large extent. In 200001, interstate differences in productivity in
individual industries were very highly correlated with the differences in capital
intensity, among the major states in 200001. Coefficients of correlation between
the two were higher than +0.75 in 13 out of 15 industry groups (Table 28), and more
~66~
Table27
CapitalLabourRatioinOrganisedManufacturinginRs.Lakh(200607)
IndustryCode
AndhraPradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
Maharashtra
MadhyaPradesh
Orissa
Punjab
Rajasthan
TamilNadu
UttarPradesh
WestBengal
Chhattisgarh
Jharkhand
Uttarakhand
Assam
Manipur
Meghalaya
Nagaland
Tripura
A&NIslands
Chandigarh
Delhi
DadarandNagar
Haveli
DamanandDiu
Punducherry
Goa
HimachalPradesh
Jammu&Kashmir
India
2021 1.82 2.12 2.31 1.98 2.45 0.36 8.16 2.29 1.48 1.72 1.3 1.32 1.71 1.23 1.46 2.75 5.19 1.11 2.41 4.71 0.88 1.86 4.38 1.8 3.93 3.64 1.02 3.04 4.19 2.87 1.37 1.94
22 0.2 1.13 0.97 3.4 4 0.19 3.87 0.79 0.56 3.5 1.55 1.87 1.57 0.85 1.15 1.26 9.49 2.38 N.E. N.E. 0.67 0.49 N.E. 1.12 5.7 5.88 5.86 5.46 7.11 1.35 1.84 0.83
23+24+25 4.01 0.64 4.73 3.43 5.32 2.04 16.11 6.09 1.47 6.27 3.6 4.02 5.15 0.69 5.05 16.36 0.87 N.E. N.E. N.E. N.E. N.E. N.E. 0.92 21.57 13.29 3.79 N.E. 7.46 3.71 4.23
26 1.46 0.35 2.66 1.87 0.59 2.17 15.9 6.14 1.55 1.4 2.38 1.15 0.62 1.37 3.13 0.43 4.46 0.35 N.E. N.E. N.E. N.E. N.E. N.E. 1.47 8.66 3.81 4.42 15.83 2.08 1.49 1.63
27 1.33 0.25 0.82 1.21 1.77 0.82 15.11 1.38 0.64 1.61 1.62 0.79 0.63 1.37 0.92 0.46 16.61 0.85 0.4 N.E. 0.66 0.73 1.71 0.44 0.96 1.66 4.07 3.03 N.E. 0.89 0.36 1.32
28 6.61 0.84 3.98 3.73 2.39 2.5 24.83 1.6 8.72 5.13 1.76 3.07 2.04 2.7 2.09 2.22 15.15 3.32 N.E. 0.59 0.14 0.59 N.E. 3.25 4.61 5.85 7.95 3.4 3.24 3.81 1.67 4.02
29 0.94 0.49 1.26 3.15 1.18 2.13 1.5 0.71 N.E. 1.66 0.85 0.75 0.58 1.85 0.54 N.E. 4.33 N.E. N.E. N.E. N.E. N.E. N.E. N.E. 2.29 N.E. N.E. 0.53 N.E. 2.3 1.77 1.14
30 6.12 8.36 11.23 3.9 5 3.92 38.91 4.85 18.41 6.92 8.52 2.23 4.48 14.92 4.77 24.68 9.75 5.1 N.E. 3.09 N.E. 2.74 N.E. N.E. 3.61 6.76 3.5 6.86 12.72 7.52 2.64 6.98
31 9.13 8.02 49.08 3.11 18.06 8.7 45.26 5.16 5.2 1.1 6.98 7.09 10.47 13.29 32.08 2.52 13.92 30.3 N.E. N.E. N.E. 30.23 N.E. 4.09 2.76 6.59 3.95 4.26 9.93 4.36 4.02 13.69
32 3.43 0.92 4.86 1.48 5.12 1.64 6.75 11.31 2.73 0.25 5.08 3.95 0.71 3.52 17.69 3.64 19.59 0.41 0.25 10.76 0.08 0.12 N.E. 2.94 2.31 6.15 2.65 12.79 13.79 8.64 2.91 3.41
33 9.73 8.66 9.81 7.82 14.83 1.22 10.73 24.98 12.82 1.82 2.16 4.44 7.19 4.38 21.86 20.68 5.96 3.59 N.E. 6.88 N.E. 54.31 N.E. 9.44 1.62 8.54 4.75 4.66 16.95 3.01 0.89 7.74
34 1.51 2.44 2.54 2.07 1.45 0.89 14.89 1.09 0.61 0.73 2.4 1.12 0.46 0.58 1.14 7.55 2.29 0.17 N.E. N.E. N.E. 0.86 N.E. 0.8 2.36 2.24 1.15 3.29 4.7 1.57 0.95 1.47
3536 3.01 4.38 3.31 2.87 4.69 1.43 20.9 2.39 2.37 1.76 3.57 2.33 2.42 2.17 2.14 4.34 4.08 0.91 N.E. N.E. N.E. 0.6 N.E. 5.64 1.67 5.36 3.84 3.45 8.22 4.57 0.68 3.26
37 1.41 4.78 3.9 4.56 3.97 1.18 61.14 2.14 0.51 1.44 3.46 4.94 8.66 1.34 1.64 9.7 27.82 0.38 N.E. N.E. N.E. N.E. N.E. 1.45 1.25 N.E. 4.92 4.02 4.62 4.94 0.41 4
38 1.03 N.E. 0.81 1.92 1.95 1.19 17.61 0.18 N.E. 1.03 1.41 1.43 1.1 2.59 0.5 N.E. 2.17 N.E. N.E. N.E. N.E. N.E. N.E. 2.26 1.8 4.09 2.28 3.7 5.11 0.99 0.44 1.32
All 2.77 5.1 7.82 3.12 3.65 1.4 19.07 4.94 8.33 2.22 3.66 2.38 2.7 2.78 14.67 13.43 8.31 3.67 0.46 8.24 0.5 1.08 4.14 4.65 2.23 10.26 4.33 4.95 9.62 5.65 2.01 3.86
Note:SameasTable25
~67~
Table28
CoefficientofCorrelationbetweenPerWorkerProductivityand
CapitalLabourRatioinOrganisedManufacturing
200001 200607
IndustryCode AmongMajorStates AmongAllStates AmongMajorStates AmongAllStates
2021 0.97 0.88 0.96 0.41
22 0.61 0.02 0.70 0.28
23+24+25 0.96 0.88 0.95 0.91
26 0.98 0.88 0.97 0.80
27 0.99 0.96 0.99 0.64
28 0.94 0.78 0.96 0.82
29 0.42 0.66 0.38 0.65
30 0.88 0.74 0.97 0.70
31 0.76 0.65 0.92 0.80
32 0.97 0.77 0.93 0.51
33 0.84 0.82 0.93 0.65
34 0.98 0.94 0.99 0.90
3536 0.99 0.88 0.99 0.81
37 0.98 0.95 0.99 0.90
38 0.99 0.79 0.99 0.92
All 0.76 0.62 0.79 0.65
than +0.90 in 10 cases. Only in the case of leather products the relationship was
somewhat weak. Relationship, however, became weaker once all states and UTs
were considered; still, in all cases, except beverages where the coefficient was
negative though insignificant, it was above +0.65. The relationship is found to be
strong in all cases except in the case of leather products in 200607, coefficient of
correlation being above 0.90 in eleven cases, and above 0.70 in the other three
cases, if one considered the 14 major states. Once the analysis is extended to all
states and UTs, the relationship becomes weaker, yet is significant in 13 cases
including leather products. Thus technology, insofar as it is indicated by capital labour
ratio, explains a large part of the interstate variations in productivity in
manufacturing industries in the organised sector. Influence of regional factors,
including working environment and culture in leading to differences in productivity
even with the use of similar technology in an industry, however, cannot be ruled out.
UnorganisedSector
ExtentofDifferences
Productivity differences are smaller in the case of unorganised sector than of
the organised sector. Still they were quite large. Taking the major states only, per
worker value added ranged between the highest of Rs. 21951 in Punjab and Rs.
~68~
20530 in Gujarat to the lows of Rs. 3595 in Orissa and Rs. 7791 in Madhya
Pradesh, in 200001 (Table 29). If all states and UTs were considered, then Sikkim
and Arunachal Pradesh show highest productivity at Rs. 34101 and Rs. 31444
respectively. Orissa still has the lowest, but the second lowest place is taken by
Chhattisgarh with a value added per worker of Rs. 6409. These figures are not as
distant from the national average (Rs. 11649), than the highest and lowest figures in
case of the organised sector.
In 200506, the latest year for which data are available for the unorganised
sector, the variations are between Rs. 28606 in Haryana and 4802 in Orissa, among
the major states (Table 30). The second highest productivity is found in Maharashtra
(Rs. 27841) and the second lowest in Bihar (Rs. 6995). Including other states and
UTs, we find that Arunachal is on the top, with a value added per worker of Rs.
57180, with Pondicherry (Rs. 46251) in the second position. Orissa is still at the
bottom with Bihar the second lowest. Deviations from the national average (Rs.
12993) are, however, not as large in the organised as in the unorganised sector, in
200506 also.
Table29
PerWorkerProductivityofUnorganisedManufacturinginRs.(200001)
23+24+
States 2021 22 25 26 27 28 29 30
AndhraPradesh 11158 5700 5949 7976 6021 17187 16819 5446
Bihar 9138 6360 9004 10574 7327 14500 10127 3098
Gujarat 16459 8802 37979 15519 13765 20814 13237 21818
Haryana 19142 37654 23902 18110 14991 17435 16235 36650
Karnataka 10981 4433 14314 11742 8311 14687 14747 5951
Kerala 14023 6766 7413 10387 12166 14387 17080 16868
MadhyaPradesh 10194 2436 20263 11118 5790 14596 9682 17348
Maharashtra 13679 6166 29604 16235 10150 25952 14062 39682
Orissa 4954 4597 4515 6921 2235 8713 12529 27074
Punjab 23444 13362 15345 16050 16981 22096 15151 28709
Rajasthan 12710 3332 15310 14132 12267 20289 14025 15607
TamilNadu 15885 4414 12014 13196 7764 18215 37333 7878
UttarPradesh 8700 2917 10652 8696 7140 13502 14470 6030
WestBengal 8924 4021 8353 11713 4975 9566 21581 18141
Chhattisgarh 7306 3463 6079 8748 4192 10652 8121 2193
Jharkhand 8179 3756 5676 10992 4716 8807 13205 12657
Uttarakhand 11388 3635 5369 9500 10676 14414 12219 44095
ArunachalPradesh 32354 N.E. 27148 28050 30769 541 N.E. N.E.
Assam 10029 6305 10615 15322 9839 13856 13706 11308
Manipur 15809 7379 6275 8624 14173 19749 16636 10714
Meghalaya 22601 12520 7358 18376 7622 23005 17180 17451
Mizoram 13415 3193 44659 25306 21110 62223 22413 N.E.
Nagaland 13611 12841 13080 21398 12287 25969 10456 14886
~69~
Sikkim 22664 469623 N.E. 18775 14894 10451 N.E. 33017
Tripura 9763 4770 7950 15822 5517 28697 17587 3489
A&NIslands 9004 2581 N.E. 19632 24968 20091 18044 18062
Chandigarh 23242 N.E. N.E. 16054 9202 15598 18201 42190
Delhi 29776 16189 24880 30493 24450 26346 24434 39684
D&NagarHaveli 17183 N.E. N.E. 18280 12348 42141 N.E. N.E.
Daman&Diu 29974 10957 N.E. 15249 13781 16642 15842 34496
Lakshadweep 13209 N.E. N.E. 21902 55699 2068 N.E. N.E.
Pondicherry 13720 15632 6919 10214 10920 14712 15433 22557
Goa 20559 1909 21298 13274 17557 22563 4527 25009
HimachalPradesh 16356 7844 10644 11701 8572 24699 16654 6796
J&K 22529 15213 6513 16149 19070 17092 19043 27597
India 10788 4292 11960 12809 6793 17763 17198 9913

States 31 32 33 34 3536 37 38 ALL
AndhraPradesh 10890 9833 20075 14861 18037 87700 11439 8381
Bihar 19615 14008 16177 13024 13129 15879 11566 9480
Gujarat 31054 15410 29406 22931 35020 22678 21118 20530
Haryana 32115 9963 40723 24415 27507 53534 19009 19327
Karnataka 15594 14979 25247 19618 19059 20299 14136 10033
Kerala 33162 23978 13130 20506 20389 21549 18710 13427
MadhyaPradesh 28646 7617 16333 8302 10991 16634 8908 7791
Maharashtra 34911 11549 33216 23009 48492 38561 20475 18835
Orissa 7611 3177 8681 6243 14680 12294 5749 3596
Punjab 49899 25603 41216 27684 40238 42370 20613 21951
Rajasthan 25531 15340 29647 18028 30499 25760 18520 14625
TamilNadu 24147 12765 20579 22451 37774 32288 11172 12817
UttarPradesh 23947 11001 18198 14416 17621 25844 10217 9384
WestBengal 16709 16470 77945 14651 19718 22334 9840 8701
Chhattisgarh 35175 4916 37999 8762 14824 3769 8131 6409
Jharkhand 12776 10100 11758 7085 6197 22397 8536 7121
Uttarakhand 43182 6979 5440 11629 18156 18582 16479 10228
ArunachalPradesh N.E. N.E. N.E. 27333 18347 N.E. 68361 31444
Assam 9312 9745 22735 20527 9985 36879 19534 10844
Manipur 17616 20138 13841 15482 22671 N.E. 24330 9635
Meghalaya 29806 12356 17788 19615 15945 59149 20825 13255
Mizoram 58502 47543 55318 24181 20246 40335 31476 22838
Nagaland 15642 51562 N.E. 15387 22248 35732 18842 14665
Sikkim N.E. N.E. N.E. 7813 N.E. N.E. 21588 34101
Tripura 10546 11456 28570 19581 17501 N.E. 14100 8598
A&NIslands 58870 29637 35206 44555 28529 27594 34374 18844
Chandigarh 32663 44988 168422 37389 44447 34590 64907 43340
Delhi 59035 25389 31434 28437 35515 30556 36235 32265
D&NagarHaveli 47895 13780 55652 21354 27775 N.E. 10962 22964
Daman&Diu 77592 16777 24837 26907 66746 N.E. 17397 46127
Lakshadweep N.E. N.E. N.E. 36348 N.E. N.E. N.E. 28534
Pondicherry 67063 23768 N.E. 17302 39243 N.E. 7531 16562
Goa 45288 15592 146005 24879 35238 22166 41636 14501
J&K 46970 19760 46850 24401 30131 N.E. 30997 15926
India 30319 12002 30246 17455 31324 31246 15473 11649
Note:N.E.Notestimated
Source:NSSOSurveyonUnorganisedManufacturing(56thRound)
~70~
Table30
PerWorkerProductivityofUnorganisedManufacturinginRs.(200506)
23+24
States 2021 22 +25 26 27 28 29 30
AndhraPradesh 7239 3775 12636 7409 6278 12794 17415 6729
Bihar 7752 3749 5662 12249 7655 7388 10358 2020
Gujarat 17009 8461 33467 15273 13715 67705 11137 34755
Haryana 30492 17830 102678 23197 20309 26834 17442 29639
Karnataka 17800 2611 27976 16254 11317 17916 16139 8930
Kerala 11977 5929 8063 12558 16522 14521 22562 5567
MadhyaPradesh 10983 1632 14665 11956 5647 20565 16913 12307
Maharashtra 16593 1904 33034 20576 11968 40321 23243 34083
Orissa 5403 2339 10482 7829 2426 11641 11754 18117
Punjab 27936 120708 17069 15899 22184 30222 18595 45994
Rajasthan 17988 6091 8601 18615 10490 17344 12361 27509
TamilNadu 16940 5532 15980 16024 12312 11078 17874 6334
UttarPradesh 9176 2180 11557 9149 7991 15934 17614 5050
WestBengal 8608 2651 9189 10395 4830 8476 15993 4859
Chhattisgarh 7902 2111 10820 9294 3666 20379 18327 18439
Jharkhand 10327 3040 N.E. 11534 6824 13491 11893 37557
Uttarakhand 12468 N.E. 12945 12797 13930 17861 9556 10100
ArunachalPradesh 56752 N.E. N.E. 46741 39678 13080 N.E. N.E.
Assam 11842 5873 8695 14024 12159 23420 14089 12447
Manipur 16076 10550 5497 11536 15827 N.E. 9400 7828
Meghalaya 24119 15341 17487 22188 11244 17762 27422 24835
Mizoram 11415 10349 46788 28260 23428 8372 N.E. N.E.
Nagaland 19788 17560 12493 43499 14898 34929 1241 N.E.
Sikkim 17795 95649 N.E. 20300 11352 23163 N.E. 157590
Tripura 2248 3753 5250 13400 14389 86048 12367 25381
A&NIslands 7068 4448 N.E. 27528 20400 7913 38219 46194
Chandigarh 62897 37332 N.E. 15806 28702 33272 N.E. 60585
Delhi 30472 283342 31223 31337 27930 21009 22500 18888
D&NagarHaveli 28414 N.E. N.E. 33039 13968 35488 45831 85023
Daman&Diu 67881 12642 N.E. 18968 20124 14959 N.E. N.E.
Lakshadweep 12111 N.E. N.E. 18832 16346 9873 N.E. N.E.
Pondicherry 43961 36136 11256 25477 16244 21219 12704 75290
Goa 32576 25697 N.E. 24150 17709 34484 3334 71687
J&K 21665 N.E. 9603 16125 24549 29713 44329 85850
India 11708 3112 16879 13251 8018 18790 17687 9230

States 31 32 33 34 3536 37 38 ALL
AndhraPradesh 18184 9856 4972 13504 21167 20558 10803 8091
Bihar 10443 8105 8150 12104 8795 13424 9129 6995
Gujarat 46400 15111 29712 13254 42213 25111 16377 20360
Haryana 67474 20081 56573 35795 34837 82126 19903 28606
Karnataka 26717 13108 53934 16187 43054 42286 14433 14707
Kerala 27662 18859 24548 15989 41016 30596 17823 13808
MadhyaPradesh 33844 10468 13173 6420 23904 167501 15723 7339
Maharashtra 42620 13538 24310 21230 62836 30010 57400 27841
Orissa 17511 7098 71520 7272 10777 34048 10129 4802
Punjab 55754 14022 30082 20410 31651 37591 22088 21790
Rajasthan 28094 11618 23199 20285 23665 40848 20579 16069
TamilNadu 22862 18548 19654 21120 33038 33952 12449 14376
UttarPradesh 41608 10075 15597 21868 20374 24096 12515 10008
WestBengal 19275 8207 28566 13558 47714 15258 18950 8746
~71~
Chhattisgarh 41686 5197 256234 4488 31339 29664 17716 8952
Jharkhand 39712 8803 16326 9840 23731 24404 23456 7127
Uttarakhand 52123 5845 39275 6106 21382 37412 28353 12953
ArunachalPradesh N.E. 31050 2161 99077 N.E. N.E. 64644 57180
Assam 18117 6805 208976 14594 16761 13341 24730 11375
Manipur 16789 10987 9528 19533 10244 N.E. 17894 8789
Meghalaya 20306 14660 17330 20093 34283 47170 24742 17313
Mizoram 98381 11111 N.E. 14039 30993 N.E. 30549 19841
Nagaland 34821 42191 N.E. 11548 26684 15661 12213 18776
Sikkim N.E. N.E. N.E. 11744 N.E. N.E. 35443 25000
Tripura 22723 18452 13873 14334 18271 17676 22667 8945
A&NIslands N.E. 49698 30505 18295 76028 51531 90197 28264
Chandigarh N.E. N.E. 397575 20972 70177 44772 32397 37095
Delhi 42419 59117 175897 22407 38259 29411 19532 31130
D&NagarHaveli 53742 31973 N.E. 26973 44445 N.E. 69740 29177
Daman&Diu 49815 12294 143245 17879 45780 N.E. 33729 39677
Lakshadweep N.E. 36906 N.E. 9842 N.E. N.E. 6001 16922
Pondicherry 27013 23663 23713 12911 273575 13761 10246 46251
Goa 78879 17865 N.E. 22975 81074 75009 22218 29167
J&K 41506 34474 44875 24164 63073 26509 31230 18982
India 33310 11432 42758 17003 40248 32121 22948 12993
Note:SameasTable29
Source:NSSOSurveyonUnorganisedManufacturing(62ndRound)
TheCompositionEffect
How far can the interstate productivity differences be influenced by the
structure of industries, i.e. high or low productivity industries dominating a states
unorganised manufacturing sector? We attempt to answer this question by
comparing the relative productivity levels of states with the share of five highest
productivity industries (at the all-India level) for the year 200506. These five
industries (namely chemical products, basic metals, machinery, transport equipment
and other manufacturing) accounted for the largest share of unorganised
manufacturing in Gujarat (41%), Maharashtra (39%) Haryana (28%) and Punjab (29%)
(Table 31) in the group of major states; and these four were also the states with
highest productivity. On the other side, Bihar, Andhra Pradesh and Orissa have the
lowest shares (4%, 9% and 10%) of these five industries and also were at the bottom
of the states ranking by productivity.
DifferencesinIndividualIndustries
Thus, it appears that overall differences in productivity in unorganised
manufacturing among states are mainly due to the differences in the composition viz.
share of high and low productivity industries. But, at the same time there are
~72~
Table31
AverageShareofTopFiveHighestProductivityIndustriesatAllIndialevelintheGross
ValueAddedinUnorganisedManufacturing(200506)
31 33 3536 37 38 Total
MajorStates
AndhraPradesh 1.47 0.06 2.05 0.38 4.64 8.60
Bihar 0.49 0.23 1.27 0.08 2.12 4.18
Gujarat 2.64 0.41 15.38 0.23 22.56 41.23
Haryana 4.11 2.22 13.35 2.74 5.47 27.89
Karnataka 1.65 0.01 4.22 0.69 2.78 9.35
Kerala 5.65 0.11 6.16 0.87 7.29 20.07
MadhyaPradesh 0.94 0.23 4.68 2.35 4.22 12.43
Maharastra 3.08 0.44 10.69 1.83 23.38 39.43
Orissa 0.52 2.81 1.32 0.87 4.20 9.72
Punjab 2.09 0.15 10.40 7.73 8.47 28.85
Rajastan 1.08 0.26 4.60 0.67 13.19 19.80
TamilNadu 2.08 0.82 4.46 1.09 4.66 13.11
UttarPradesh 0.99 0.45 4.52 2.61 2.89 11.45
WestBengal 0.93 1.53 8.14 0.18 10.34 21.13
NewStates
Chhattisgarh 3.73 18.65 5.84 1.37 1.54 31.12
Jharkhand 0.35 0.03 1.32 0.18 2.78 4.66
Uttarakhand 0.09 0.35 8.25 0.71 11.89 21.30
NorthEasternStates
ArunachalPradesh 0.00 0.03 0.00 0.00 4.50 4.54
Assam 0.09 2.93 0.37 0.05 4.81 8.25
Manipur 0.31 0.83 0.25 0.00 7.82 9.21
Meghalaya 9.32 0.86 0.05 4.24 2.01 16.48
Mizoram 1.44 0.00 0.33 0.00 1.17 2.94
Nagaland 5.17 0.00 2.33 0.04 0.33 7.88
Sikkim 0.00 0.00 0.00 0.00 9.39 9.39
Tripura 0.73 0.02 0.39 0.08 6.69 7.91
A&NIslands 0.00 5.13 4.95 8.62 20.02 38.71
Chandigarh 0.00 10.14 12.31 1.09 5.84 29.38
Delhi 3.17 8.62 10.22 1.95 4.92 28.87
D&NagarHaveli 24.43 0.00 5.26 0.00 2.03 31.72
Daman&Diu 29.57 23.52 1.29 0.00 20.28 74.67
Lakshadeep 0.00 0.00 0.00 0.00 0.20 0.20
Pondicherry 3.43 0.47 51.32 1.08 1.66 57.95
Goa 3.31 0.00 18.43 2.31 10.46 34.51
HimachalPradesh 6.39 0.77 39.18 1.02 1.60 48.96
Jammu&Kashmir 0.19 0.36 1.41 0.01 3.25 5.22
India 2.11 1.07 7.52 1.37 10.04 22.11
SourceandNote:SameasTable30
significant differences in productivity in the same industry groups. Thus, chemical

products had a value added per worker as high as Rs. 67474 in Haryana followed by
Rs. 55754 in Punjab, but as low as Rs. 10443 in Bihar and Rs. 17511 in Orissa
(Table 30). The range in case of basic metals was between Rs. 71520 in Orissa (and
Rs. 397575 in Chandigarh, if all states and UTs are considered) and Rs. 4972 in
Andhra Pradesh (and Rs. 2161 in Arunachal Pradesh, if all states/UTs are included in
comparison). In machinery, the difference was much less among major states,
between Rs. 62836 in Maharashtra and Rs. 8795 in Bihar; the figure for Himachal
~73~
Pradesh was, however, way higher at Rs. 389097 if all states/UTs are considered,
and in transport equipment differences among major states ranged between Rs.
167501 in Maharashtra to Rs. 13424 Bihar and Rs. 13341 in Assam.
TechnologyandProductivityDifferentials
Are these differences in individual industries due to differences in technology,
as seen in terms of capital intensity indicated by the fixed capital per worker? Capital
intensity varies widely across states in the unorganised manufacturing as a whole. In
200506, it was the highest in Haryana at Rs. 93450 followed by Punjab at Rs.
59957 and Maharashtra at Rs. 49054. The lowest was in Orissa (Rs. 4546) followed
by Bihar (Rs. 8918) (Table 32). Goa (Rs. 68235) and Pondicherry (Rs. 63377)
showed higher capital intensity among smaller states and UTs. Variations do not
seem very large. But they are larger in the case of individual industries. Thus
chemical products, the industry with highest capital intensity (Rs. 82411), had fixed
capital per worker of Rs. 203396 in Haryana, and Rs. 245059 in Himachal Pradesh,
but only Rs. 12504 in Bihar and Rs. 10733 in Meghalaya. Industry with the next
highest capital intensity, namely basic metals: it was Rs. 445787 in Chandigarh and
Rs. 378679 in Delhi, but only Rs. 12340 in Jharkhand and Rs. 13635 in Meghalaya.
Yet, the technological differences as indicated by fixed capital per worker

seem smaller in the case of unorganised than of the organised industry and they also
seem to explain interstate productivity differences to a smaller extent and in a
smaller number of industries than in the case of organised industry. And over the
years the relationship between capital intensity and productivity seems to have
become weaker, though continuing to be significant. In 200001, correlation
between the two variables was high (r 0.80) in 10 out of 15 industries in the 14
major states, but in only one industry if all states/UTs are included. In 200506, the
relationship is strong (r 0.80) in only 8 in the former and in two in the latter
grouping (Table 33).
Broad conclusions that emerge from this analysis of interstate differences in

productivity are as follows: One, difference in aggregate productivity is very large in
the organised manufacturing but somewhat smaller in the case of the unorganised
manufacturing. Two, these differences are due to the differences in composition of
~74~
~75~

31
30
29
28
27
26
22
2021
industryGroup
23+24+25
28120 8907 26742 38035 11231 17337 23701 8257 19090 AndhraPradesh
12504 6593 8302 19119 5188 15436 6331 1941 15698 Bihar
137714 48671 11853 96779 24570 28719 110017 7237 27497 Gujarat
203396 64516 41658 107720 64298 69527 187119 58428 81012 Haryana
59824 21911 27397 60808 15396 32014 31092 6219 17283 Karnataka
61649 10642 28140 135893 22322 23135 10764 42119 25178 Kerala
94568 24863 20394 66160 9274 29101 12161 2547 25249 MadhyaPradesh
107579 68429 37627 91688 25398 37855 62671 4360 44293 Maharashtra
26138 54009 17629 30560 1233 9385 9916 813 7784 Orissa
128767 81379 33475 89061 64187 43622 59958 199006 76848 Punjab
91391 19929 22712 59675 20362 29398 24456 10785 32059 Rajasthan
68857 9224 34297 30671 23051 39457 30476 4865 39802 TamilNadu
70629 11079 23796 37016 9472 12634 28713 3046 21188 UttarPradesh
36861 6070 11156 15303 5178 10621 10650 2875 11584 WestBengal
128715 12896 65404 64791 5355 18489 4985 2013 21377 Chhattisgarh
76859 70933 21000 67066 4807 14872 N.E. 1336 13262 Jharkhand
156918 33065 56505 153087 20527 43894 20143 N.E. 54973 Uttarakhand
N.E. N.E. N.E. 51247 47338 14479 N.E. N.E. 30548 ArunachalPradesh
Table32
27973 7596 6603 50553 4287 13045 10318 2199 13133 Assam
1856 4143 13834 112744 12675 25304 13828 26671 24015 Manipur
10733 20383 12884 37566 4896 28418 8971 7461 16131 Meghalaya
43972 N.E. N.E. 92135 31115 81778 88357 479 18157 Mizoram
27063 N.E. N.E. 67130 17871 34813 18997 14428 22025 Nagaland
N.E. 61559 N.E. 58207 2322 33727 N.E. 52947 31753 Sikkim
81770 14128 19215 40807 3984 27583 5693 1183 3677 Tripura
N.E. 83645 62382 46670 25504 37570 N.E. 5298 25312 A&NIslands
CapitalLabourRatioinUnorganisedManufacturinginRs.(200506)
N.E. 237806 N.E. 53745 111580 39374 N.E. 1052212 118381 Chandigarh
135367 48603 48983 96195 42876 53656 19187 164382 143645 Delhi
66546 31999 110833 34401 4962 49596 N.E. N.E. 48237 D&NagarHaveli
31267 N.E. N.E. 24426 13884 22474 N.E. 20842 20053 Daman&Diu
N.E. N.E. N.E. 52963 19639 28280 N.E. N.E. 25346 Lakshadeep
170509 157239 15148 66599 41790 44479 9879 56477 89904 Pondicherry
111944 123975 78193 113038 44824 93437 N.E. 57369 79618 Goa
245059 282952 189820 121307 18371 31286 26413 29383 40241 HimachalPradesh
97669 226921 60342 118898 24912 24249 46622 109515 46725 J&K
82411 16848 26523 53551 11370 23672 32322 4495 23138 India
~76~

38
37
34
33
32
All
3536
industryGroup
17329 24947 37617 48391 25588 44140 12757 AndhraPradesh
8918 11658 22977 15177 10085 22064 6243 Bihar
34955 13084 42626 62753 38231 54483 11276 Gujarat
Note:N.E.Notestimated
93450 164958 130796 132224 106086 94240 68369 Haryana

24059 30728 39211 85411 34051 95899 77906 Karnataka
28820 23257 44043 73844 26982 60842 48260 Kerala
12309 30195 88925 31220 11045 28344 7637 MadhyaPradesh
49054 81692 35529 60851 42784 40295 22958 Maharashtra
4546 11954 73092 17523 7021 22625 4700 Orissa
59957 55442 87031 98087 74660 51785 32049 Punjab
28671 39348 147848 56617 35655 49473 14656 Rajasthan
29290 25819 48731 79963 36351 45883 20620 TamilNadu
17354 25153 100646 50298 32858 42624 8161 UttarPradesh
9841 20054 25298 41287 26271 27135 10174 WestBengal
22159 119589 52173 331311 11394 402369 9599 Chhattisgarh
6488 28612 23718 53909 5873 12340 8433 Jharkhand
42774 84085 161278 77477 13824 37961 10836 Uttarakhand
25857 14618 N.E. N.E. 21032 11158 23539 ArunachalPradesh
Table32
9875 32162 20077 27124 11788 38592 11010 Assam

16732 15348 N.E. 6891 32867 13913 1537 Manipur
10422 30062 22116 22711 6176 13635 2848 Meghalaya
40866 38854 N.E. 7937 60180 N.E. 14085 Mizoram
20267 22712 25918 23132 14002 N.E. 45296 Nagaland
26471 49184 N.E. N.E. 18948 N.E. N.E. Sikkim
6119 41797 63272 30594 18243 21079 2076 Tripura
38214 129188 42694 27581 26190 7854 23690 A&NIslands
CapitalLabourRatioinUnorganisedManufacturinginRs.(200506)
111318 138488 503373 318417 68712 445787 N.E. Chandigarh

72506 34643 73367 145662 59256 378679 176477 Delhi
34016 42931 N.E. 81176 35354 N.E. 15914 D&NagarHaveli
35156 37902 N.E. 31618 8299 133130 21033 Daman&Diu
21326 6392 N.E. N.E. 9747 N.E. 14382 Lakshadeep
63377 93321 16053 74537 68372 91257 9766 Pondicherry
68235 40082 122282 71364 71135 N.E. 37291 Goa
35921 88856 537007 90468 28958 124155 22952 HimachalPradesh
35651 134092 21167 172863 88786 54613 29696 J&K
23240 35985 69834 70891 32120 71365 15044 India
Table33
CorrelationbetweenPerWorkerProductivityandCapitalLabourRatio
inUnorganisedManufacturing
200001 200506
AmongMajor AmongAll AmongMajor
IndustryCode States States States AmongAllStates
2021 0.94 0.71 0.92 0.54
22 0.86 0.79 0.97 0.07
23+24+25 0.51 0.48 0.94 0.92
26 0.90 0.60 0.87 0.41
27 0.88 0.53 0.92 0.70
28 0.91 0.43 0.56 0.07
29 0.62 0.62 0.72 0.71
30 0.87 0.76 0.90 0.48
31 0.92 0.61 0.95 0.68
32 0.64 0.41 0.64 0.61
33 0.45 0.83 0.42 0.87
34 0.93 0.57 0.88 0.22
3536 0.89 0.53 0.46 0.16
37 0.33 0.47 0.43 0.57
38 0.84 0.62 0.44 0.35
ALL 0.93 0.66 0.91 0.62
Source:NSSOSurveyonUnorganisedManufacturing(56thand62ndRound)
industries, much more in the case of unorganised than of the organised

manufacturing. Three, interstate technological variation in individual industries seem
responsible for productivity differentials much more in the case of organised than
the unorganised segment. And, therefore, fourth, local market and work environment
in the states seem to play important roles in making productivity vary across states,
but relatively more in the unorganised than the organised segment of manufacturing
industry.
~77~
VIII. Conclusions: What Explains Variations?

MainFindings
Description and analysis of various aspects of industrial development in different
states presented in the preceding sections, even though not showing any clear
pattern, reveal the following interesting trends:
1. An indicated by the share of manufacturing in GSDP, Tamil Nadu,

Maharashtra, West Bengal and Gujarat were the most industrialised states in
that order in 198081. In 200809, the four most industrialised states were:
Gujarat, Maharashtra, Tamil Nadu and Haryana, in that order. Gujarat is at
the top with 30 per cent of its GSDP originating from manufacturing. Gujarat
has also seen the fastest pace of industrialisation, followed by Haryana, Punjab
and Himachal Pradesh, while West Bengal, Andhra Pradesh and Tamil Nadu
experienced a decline in the share of manufacturing in their respective GSDP.
Disparities in the extent of industrialisation have somewhat decline during
19812009.
2. Most states have experienced significant shift from agriculture to other

sectors, the shift has been the largest in Orissa, Karnataka, Gujarat and
Kerala and relatively small in Punjab and West Bengal. Major shift has been in
favour of manufacturing particularly in Gujarat, Rajasthan and Orissa. Larger
structural changes have generally been accompanied by faster GSDP growth
and shift to manufacturing more often than shift to services has contributed
to faster growth.
3. Growth rates of manufacturing GSDP have been quite divergent throughout

19812009, but especially since 2001. Rates of growth have, however, not
necessarily been higher in states with initially high level of industrialisation,
except during the period 200109. Thus, industrial growth in recent years
has led to increasing divergence.
~78~
4. The four states with largest share in national manufacturing GDP, namely
Maharashtra, Tamil Nadu, West Bengal and Gujarat, have continued to
account for over half of the national GVA in manufacturingMaharashtra
remaining at the top, Gujarat replacing Tamil Nadu in the second position
and West Bengal receding from third to fourth position. Overall disparity in
the shares of different states has slightly declined in 200708 from 198081.
In employment terms, Uttar Pradesh replaces Gujarat among the top four
states, which account for 48 per cent in 200405, Uttar Pradesh alone
accounts for 16 per cent of employment, the other three, namely
Maharashtra, Tamil Nadu and West Bengal account for 11 per cent each.
5. Organised sector accounts for major share of the GSDP in manufacturing, in

most states, the highest being in Orissa (87%). It is generally higher in less
industrialised states. West Bengal is the only state with unorganised sector
contributing the major share; it has also seen, along with Haryana, Punjab and
Gujarat, a decline in the share of organised sector over the period 1981
2009. Across the states, the shares of organised and unorganised sector in all
India are found to be highly correlated.
6. Agro-based industries have declined in importance in most states, except in

Kerala with 77 per cent share in employment and 50 per cent in GVA,
Karnataka with 60 and 34 per cent, West Bengal with 59 and 32 per cent and
Punjab with 46 and 57 per cent of two respectively. These industries
generally have lower productivity than others except in Punjab where agro-
industries have higher productivity than in other industries. Share of different
states in total agro- and non agro-industries are strongly correlated with each
other, both in respect of employment and GVA.
7. There is a significant similarity among the states in the pattern of

manufacturing industries in terms of presence and importance of different 2-
digit product group. Not only most industries are found in all the states, but
many of them hold similar importance in the product structure of different
states. Thus, the top five industries in terms of employment are common in
23 out of 35 states/UTs. The same five industries are the largest at the
~79~
aggregate national level. Thus the industrial structure of most states is similar
to that of the country as a whole, indicating a low degree of specialization by
individual states. Specialization coefficient is lower than 0.30 for 13 out of 17
major states. Small states, Jharkhand and Orissa and those in the North East,
and most UTs show a high degree of specialization.
8. As pointed out earlier, most industries are quite ubiquitous: they are found in
most states. Yet, quite a few of them have over 70 per cent of their
employment concentrated in just five states. Industrial base of most states is
rather narrow, except in few cases (notably Maharashtra and Haryana) where
a relatively large number (16 and 14 out of 23) of industries have larger
weight in the states than in the countrys industrial structure. Surprisingly,
Gujarat and Tamil Nadu with only 7 industries in this category also have
narrow industrial bases.
9. Large differences are observed in productivity across states, more so in the

organised than in the unorganised sector. Variations in GVA per worker in
aggregate among states in the organised sector are largely explained by the
composition of the industries and those in individual industries by technology
(capital intensity). In the unorganised sector productivity differences seem to
be more influenced by local market and work environment rather than
technological character and composition of industries.
ExplainingInterstateVariations
Amidst varied findings, as noted above, it is quite clear that states have
performed differently from each other in terms of growth of manufacturing
industries and changes in their structure. What factors account for such differential
performance? It may not be difficult and may even not be very useful to try to
explain the differences in the levels of industrial development that have historically
existed. What may be more interesting and also useful is to attempt an explanation
of the changes that have taken place in the period of last two to three decades,
especially since the introduction of economic reforms which removed government
regulations on investment and industrial location and which, on the one hand, gave
freedom and opportunity to states to base their industrial development on
~80~
specialisation (See Dholakia, 2009), and on the other, did away with the central
governments use of its control and instrumentality to influence investment and
industrial location in favour of industrially less advanced states and regions.
Various factors that could have influenced the differential performance of

states in industrial growth during the post-reform period can broadly be divided into
the following four broad heads: capital investment, human resources, regulatory
framework and infrastructure. A study (Chakravorty and Lall, 2007, Pp. 99102)
looking at the trends in industrial investment in different states over a seven-year
period immediately after the economic reforms in 1991 found that the process of
cumulative causation was in operation insofar the existing level of industrial
investment and activity attracted the new investment. Continuity and clustering were
thus found to lead to increasing divergence. This observation is supported by findings
of our study, especially for the period 20012009.
That, however, does not mean that other factors may have had no influence
on the growth of industrial activity in different statesparticularly if there was
differential progress, in respect of them among states. Let us look at changes in
human resource development and regulatory and promotional framework and see if
there have been significant differences in terms of changes in them. Going by Human
Development Index (HDI) as the summary indicator of development of human
resources, there is a general trend towards an improvement: HDI for country as a
whole was estimated to be 0.387 in 19992000 and to have been improved to 0.467
in 200708 (IAMR, 2011, p. 24). Similar improvements have taken place in all the
states, so much so that eight states have retained the same ranking in 200708, as in
19992000, 11 states have changed ranks but only by one or two positions. Only
Rajasthan has lost by three positions and Jharkhand and North East (excluding
Assam) have gained by 4 and 3 positions respectively. Similarly there has been a
general trend towards easing of regulations and promotion of investment-friendly
climate in all the states. Various exercises by the World Bank and industry
organisations have attempted measurement of the ease and difficulty of Doing
Business in different states and have found significant differences among states. It is,
however, not clear whether the degree of ease has changed at different speeds in
the post-reform period. In general, states have competed among themselves in
~81~
projecting an investment-friendly image and it appears that it has been a zero-sum
game rather than any advantage of one over the others. Gujarat and Maharashtra
have, no doubt, offered best and Uttar Pradesh and West Bengal poor investment
climates (World Bank, 2004). But that is true both of the pre- and post-reform
periods. In fact, some other states like Andhra Pradesh and Karnataka have improved
their image as investment-friendly. Karnataka has also experienced faster industrial
growth, but Andhra Pradesh has not.
One aspect of regulatory framework that has been studied most is labour
regulation. A number of studies (e.g., Besley and Burgess 2004; Hasan et. al. 2003)
conclude that states with flexible labour regions, specially those having amended
laws and rules to give greater freedom to employers in modes of use of labour have
performed better in respect of industrial growth than others. Several other studies,
however, argue that most of these studies are methodologically faulted insofar as
they are often based on single legislation and changes in it or on answer to a leading
question of impact of labour laws to the complete neglect of other factors such as
infrastructure, market, credit, etc. (Bhattacharjea, 2006; Reddy, 2008; Nagraj, 2011).
It appears that better industrial relations climate, no doubt, helped some states (e.g.
Gujarat Andhra Pradesh and Karnataka) to perform better, but significance of this
factor was far overshadowed by other factors, particularly infrastructure. In any case,
labour market and industrial relations regulation were a part of the overall
governance and regulatory system which, as a whole, was an important factor in
encouraging or stifling industrial growth.
Infrastructure is most widely accepted as the reason for differential status and
growth of manufacturing industry among the states. Analysis has been attempted to
explain such difference in terms of a single infrastructure item such as banking
facilities (Burgess and Pande, 2003) and power (Adil, 2010).
Some studies have taken several items of infrastructure as independent

variables to explain variations in some indicator (e.g., total factor productivity TFP
in Mitra et. al., 2002) of industrial performance and found some of them more
important than others. For example, the study mentioned above found investment in
primary education, financial mobilisation as reflected in deposits and credit disbursal
~82~
and power production capacity as the factors significantly influencing industrial
productivity. Paul (2011) looked at the impact of banking outreach, physical
infrastructure and labour market flexibility on growth of manufacturing industries
across 14 major states of India in the post-liberalisation period (199192/200203)
and found that while the first two influenced industrial growth significantly the last
had no significant impact.
Often infrastructure items, including physical, economic and social items (like
road length and railway length per unit of geographical area, energy consumption,
educational facilities, hospitals, banking facilities, post and telecommunications) have
been clubbed together to construct an overall infrastructure index. Utilising on
such index [constructed by Centre for Monitoring Indian Economy (CMIE)] to
examine the relationship between infrastructure and the extent of industrialisation
(share of manufacturing in the state gross domestic product), it is observed that
there is a fairly significant relation between the two. The rank correlation coefficient
between the two was 0.36 for the year 198081. It was stronger in 199091 at 0.42,
but grew weaker at 0.33 in 200001 (Table 34). Yet it was statistically significant in all
three years.
Table34
InfrastructureandLevelofIndustrialisation
198081Rank 199091Rank 200001Rank
Infrastructure %shareof Infrastructure %shareof Infrastructure %shareof
Development manufacturing Development manufacturing Development manufacturing
States Index inGSDP Index inGSDP Index inGSDP
AndhraPradesh 8 6 8 8 12 12
Assam 15 11 13 15 11 16
Bihar 12 10 15 11 17 15
Gujarat 5 4 5 2 6 1
Haryana 4 7 4 4 5 4
HimachalPradesh 13 16 10 16 10 10
Jammuand
Kashmir 11 17 14 17 16 17
Karnataka 10 5 9 5 9 6
Kerala 3 12 2 14 3 14
MadhyaPradesh 17 9 17 7 20 7
Maharashtra 6 2 6 3 8 3
Orissa 14 14 12 13 14 13
Punjab 1 13 1 10 1 9
Rajasthan 16 8 16 12 19 8
TamilNadu 2 1 3 1 4 2
UttarPradesh 9 15 7 9 7 11
WestBengal 7 3 11 6 13 5
RankCorrelation 0.36 0.42 0.33
Source:CMIEandASI
~83~
Composite indicators are good for summary description, but not for
identifying the relative importance of different infrastructure items. In most studies,
transport and power have been identified as the most critical elements of
infrastructure influencing the pace of industrial growth in a region or state. We,
therefore, attempted an analysis to explain interstate variations in the level of
industrialisation and growth of manufacturing GSDP, focussing on railways and road
length per square kilometre of area as indicator of transport infrastructure and
electricity consumption per capita as the indicator of availability of power. Taking
share of manufacturing in GSDP as the indicators of levels of industrialisation of a
state we found that it was only the power consumption which had a positive and
significant relationship with it, in all the three time points, 1981, 1991 and 2001 for
which regression analysis was undertaken. Length of railway line had a positive but
not significant coefficient. Road length, surprisingly, came up with a negative
coefficient in all the three years. Similar results were obtained when the indicator of
the level of industrialisation was changed to per capita manufacturing GSDP, except
that the explanatory power of the model improved as also the value of the
coefficient of power consumption; and, the coefficient of road length turned out to
be positive in one case, that is, in 1981 (Table 35). Our attempts to establish
Table35
TransportandPowerInfrastructureandLevelofIndustrialisation:RegressionResults
DependentVariable:%ShareofManufacturingGSDPtoTotalGSDP
Independentvariable/ Constant Coefficient tvalue pvalue Rsquare
Timeperiod
Railwayslength_1981 9.696 0.171 1.0200 0.3300 0.0690
Railwayslength_1991 13.264 0.117 0.7800 0.4500 0.0410
Railwayslength_2001 12.727 0.157 1.1000 0.2900 0.0750
Roadlength_1981 14.007 0.0003 0.0800 0.9360 0.0005
Roadlength_1991 17.282 0.002 0.4600 0.6520 0.0149
Roadlength_2001 16.883 0.001 0.4500 0.6570 0.0135
Powerconsumption_1981 7.251 0.044 2.0200 0.0630 0.2258
DependentVariable:PercapitaManufacturingGSDP
Railwayslength_1981 401.280 18.930 1.6900 0.1120 0.1600
Railwayslength_1991 967.310 16.890 0.8500 0.4080 0.0490
Railwayslength_2001 1297.850 27.020 1.0200 0.3230 0.0650
Roadlength_1981 401.280 18.930 1.6900 0.1120 0.1600
Roadlength_1991 1492.590 0.140 0.3300 0.7480 0.0080
Roadlength_2001 2055.700 0.120 0.3100 0.7620 0.0060
~84~
dynamic relationships between these items of infrastructure and growth of
manufacturing industry in different states by estimating regression of base year
infrastructure with growth over the next decade or to relate growth in
infrastructure with growth in manufacturing GSDP over each of the three periods,
however, yielded no significant results.
Outcomes of our statistical exercises, however, do not imply that various

items of infrastructure do not influence the pace of industrial development in
different states. There could be several reasons for the relationship not showing up
significantly. One, the specification of the variables may not be the most appropriate.
Two, the quality of data may vary among states. Three, some items may not have
significantly large variations across states as over the years a larger degree of
convergence has emerged in respect of items like facilities for human development,
banking, transport and communications among the states. Fourth, where variations
are significant, the relationship is also significant. Power availability is one example
which is probably a good proxy for all items of infrastructure directly relevant for
industry; and it could overshadow the influence of other items. Five, after the initial
phase of industrialisation, infrastructure may continue to be important but its
influence is intermixed with that of agglomeration economies. In other words, new
industries go where industries exist which are also the states that have better
developed infrastructure. Between states with developed infrastructure but very
little industry and those with both developed infrastructure and a good industrial
base, the latter attracts more industry than the former. Thus, Kerala with good
infrastructure does not attract industry while Gujarat also with high level of
industrialisation does. Punjab with highly developed infrastructure has a relatively
lower level of industrialisation, but Maharashtra with relatively lower level of
infrastructure development has a high level of industrialisation (See Table 34). It
appears that the pattern of location of new industrial activity is becoming increasingly
complex and requires fresh approaches that go beyond the traditional theory of
industrial location, to explain it.
~85~
AppendixA
PercentageShare TrendGrowthRate
Agriculture&Allied Manufacturing Services Manufacturing TotalGSDP
1980 1990 2000 2008 1980 1990 2000 2008 1980 1990 2000 2008 8081/90 9091/00 0001/08 8081/08 8081/90 9091/00 0001/08 8081/08
81 91 01 09 81 91 01 09 81 91 01 09 91 01 09 09 91 01 09 09
MajorStates
1 Andhra Pra des h 38.66 33.31 28.61 22.23 13.86 15.32 13.69 12.05 39.26 41.71 46.54 51.25 5.36 5.2 6.92 5.1 4.11 5.31 8.57 5.43
38.43 25.74 9.17 13.27 39.76(4 45.41 13.95 7.36
3 Bi har(+) 52.45 43.84 (46.56) (31.62) 9.92 12.56 (3.73) (2.50) 28.02 31.95 3.39) (51.28) 6.24 3.18 (1.44) 3.94 4.57 3.2 (7.17) 3.81
4 Gujara t* 38.21 27.02 15.19 16 18.92 26.14 30.41 29.94 33.22 37.34 44.18 44.38 8.29 9.48 11.71 8.17 3.82 7.69 10.24 6.64
6 Ha rya na** 49.09 42.94 32.07 23.1 13.65 19.1 20.59 20 25.39 29.81 40.18 46.43 10.42 6.8 8.13 7.33 5.97 5.13 8.6 5.94
9 Karna taka 43.56 33.45 26.37 13.83 15.25 18.63 17.26 19.85 31.59 39.17 46.13 54.53 7.07 6.9 10.51 7.42 4.84 7.07 8.73 6.34
10 Kera l a * 41.7 31.16 23.64 15.68 9.52 11.11 11.68 9.96 40.92 50.35 56.09 60.73 3.26 5.92 6.19 5.12 2.46 5.57 8.38 5.27
24.03 23.99 16.46 15.35 39.82 38.22 5.44 6.05
11 Madhya Pra des h(+) 47.3 38.01 (25.87) (26.23) 11.11 15.5 (15.08) (12.73) 27.99 33.36 (40.55) (39.71) 6.52 6.58 (2.26) 5.82 3.43 4.63 (5.04) 4.43
12 Maha ras htra* 25.53 20.73 15.49 13.35 24.92 26.08 23.93 23.46 39.94 43.86 53.36 57.2 6.79 6.27 8.64 6.29 5.84 6.49 8.39 6.44
13 Ori s s a 54.59 38.69 28.22 19.24 9.08 11.29 12.13 17.04 27.16 34.76 43.38 45.07 8.78 4.17 15.6 6.68 4.03 4.02 9.19 4.42
14 Punja b 46.41 46.02 39.21 32.55 9.21 13.61 15.96 16.05 36.18 33.48 36.92 41.27 8.98 6.43 6.18 6.49 5.02 4.69 5.39 4.67
15 Ra ja s tha n 43.8 41.11 26.73 24 12.43 12.36 16.5 15.63 33.94 35.12 41.15 41.9 6.66 9.37 7.84 6.96 6.5 6.22 7.66 6.23
16 Tami l Na du 25.25 22.75 17.62 10.99 31.47 28.54 24.36 23.32 36.73 39.98 47.93 57.1 4.06 5.06 7.7 4.56 5.06 6.48 7.59 5.88
35.60 27.72 13.85 14.02 40.30 42.00 6.26 5.81
17 Utta rPra des h(+) 48.05 39.27 (35.65) (28.37) 9.01 13.87 (14.00) (14.01) 33.94 37.9 (40.34) (42.44) 9.53 4.8 (5.85) 5.65 4.65 3.97 (3.91) 4.35
18 Wes tBenga l * 31.94 30.95 26.06 20.7 20.31 17.8 17.28 16.37 40.38 43.34 49.35 53.5 3.32 6.36 6.07 5.21 4.65 6.66 6.57 5.81
NewStates
19 Chha tti s garh 18.25 18.33 18.5 21.94 37.55 34.44 11.66 N.E. 8.3 NE
20 Jha rkhand 23.49 15.48 19.17 32.02 33.09 35.17 16.88 N.E. 7.68 NE
21 Utta ra khand 34.88 28.37 11.74 14.12 39.81 37.07 12.15 N.E. 9.04 NE

~86~
AppendixA
PercentageShare TrendGrowthRate
Agriculture&Allied Manufacturing Services Manufacturing TotalGSDP
1980 1990 2000 2008 1980 1990 2000 2008 1980 1990 2000 2008 8081/90 9091/00 0001/08 8081/08 8081/90 9091/00 0001/08 8081/08
81 91 01 09 81 91 01 09 81 91 01 09 91 01 09 09 91 01 09 09
NorthEasternStates
22 Arruna cha l Prades h* 44.96 31.79 28.99 16.31 3.8 2.6 3.43 2.03 29.04 23.08 34.24 23.31 8.14 7.1 2.85 6.56 11.82 3.67 9.79 6.49
2 As s a m 49.21 41.48 34.02 23.93 9.55 9.17 7.67 10.74 31.57 35.34 44.58 51.05 2.96 1.87 8.86 3.91 3.4 2.4 5.4 3.31
23 Mani pur 28.76 35.44 32.89 26.36 6.41 13.53 7.93 7.48 23.13 41.59 46.24 41.03 7.81 3.37 5.19 4.46 2.82 9.98 5.43 5.52
24 Meghal a ya 41.75 29.45 25.06 21.03 1.8 2.42 2.07 8.49 42.46 49.88 53.45 50.79 7.5 7.74 14.85 11.22 4.92 10.48 6.84 7.82
25 Mi zoram 26.96 21.14 19.67 15.38 1.49 2.87 1.73 2.13 59.1 46.15 64.42 62.46 9.85 5.42 9.27 13.13 20.71 12.84 4.97 12.34
26 Na ga l a nd** 27.57 24.7 33.94 35.51 5.09 3.65 1.12 1.4 52.78 59.14 53.46 48.7 11.73 0.55 8.38 6.11 18.8 8.81 6.36 12.96
27 Si kki m 41.08 34.75 21.86 16.66 0 0 4.13 3.48 41.63 51.34 52.91 50 N.E. N.E. 6.55 N.E. 17.18 9.85 8.36 11.25
28 Tri pura * 56 42.09 32.05 28.59 3.44 2.78 4.85 2.82 39.37 49.84 59.23 58.42 3.05 12.82 4.52 8.44 5.58 12.76 8.03 9.1
29 A&NIs l a nds * 43.69 47.39 29.32 11.9 7.27 6.39 4.8 3.35 34.16 29.64 50.31 34.39 2.63 3.87 7.56 2.8 5.6 5.05 13.52 6.76
30 Cha ndi ga rh N.A. N.A. 1.1 0.53 N.A. N.A. 15.63 12.72 N.A. N.A. 72.74 72.2 N.E. N.E. 9.2 N.E. N.A. N.A. 11.1 NE
31 Del hi 4.28 2.98 1.31 0.63 8.25 8.94 11.49 8.8 82.32 83.06 78.72 81.88 8.04 3.35 5.83 5.47 8.67 0.13 9.84 4.57
32 Da dara ndNaga rHa vel i N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.E. N.E. N.E. N.E. N.A. N.A. N.A. N.A.
33 Da ma na ndDi u N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.E. N.E. N.E. N.E. N.A. N.A. N.A. N.A.
34 Laks ha dweep N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.E. N.E. N.E. N.E. N.A. N.A. N.A. N.A.
35 Pondi cherry 29.08 18.9 6.95 3.52 20.39 28.74 49.1 65.49 34.56 37.44 40.77 29.38 7.44 19.53 14.02 13.05 4.15 12.18 10.63 8.38
5 Goa * 20.55 14.53 8.44 4.46 24.24 22.29 33.26 30.08 39.53 50.61 47.94 55.88 0.71 10.68 8.68 8.08 4.65 7.15 11.2 6.4
7 Hi macha l Pra des h* 44.21 35.51 23.41 18.99 3.01 7.32 15.02 13.64 33.65 38.69 41.57 40.95 14.52 14.9 6.65 12.46 4.85 6.35 7.74 5.98
8 Ja mmu&Ka s hmi r* N.A. N.A. 32.17 28.57 N.A. N.A. 5.86 8.1 N.A. N.A. 51.44 48.76 NE NE 11.03 NE NE NE 5.16
India 38.92 31.86 24.76 21.43 15.32 17.58 17.75 16.7 36.45 40.9 46.86 47.06 7.44 7.02 8.2 6.77 5.52 6.12 8.26 6.09
~87~
AppendixB
Classificationat2digitlevel(NIC1987)
Division Classificationat2digitlevel(NIC1987)
2021 ManufactureofFoodProducts
22 ManufactureofBeverages,TobaccoandRelatedProducts
23 ManufactureofCottonTextiles
24 ManufactureofWoolsilkandmanmadefibretextiles
25 Manufactureofjuteandothervegetablefibretextiles(exceptcotton)
26 Manufactureoftextileproduct(includingwearingapparel)
27 Manufactureofwoodandwoodproduct;furnitureandfixtures
28 Manufactureofpaperproductsandprintingpublishing &Alliedindustries
29 Manufactureofleatherandproductofleather,fur&substitutesofleather
Manufactureofbasicchemicalsandchemicalproduct(expectproductofpetroleumand
30 coal)
31 manufactureofrubber,plastic,petroleumandcoal product;processingnuclersfuels
32 Manufactureofnonmetallicmineralproduct
33 Basicmetalandalloysindustries
34 Manufactureofmetalproductandparts,exceptmachineryandequipment
Manufactureofmachineryandequipmentotherthantransportequipment(manufacture
ofscientificequipment,clockisclassifiedindivision38)photographic/cinematography
3536 equipmentandwatches
37 Manufactureoftransportequipmentandparts
38 Othermanufactureindustries
39 Repairofcapitalgoods
AppendixC
Concordancebetween2digitlevelofNIC87&appropriatelevelofNIC98
(forconvertingNIC98baseddataintermsofNIC87)
NIC87Code NIC98Code
2021 151+152+153+154
22 155+16
23+24+25 171
26 172+173+181
27 20+361
28 21+22
29 182+19
30 24
31 23+25
32 26
33 27+371
34 2811+2812+289
3536 2813+29+30+31+32
37 34+35
38 33+369
39 725
Source:NationalIndustrialClassification1998,CSO
~88~
AppendixD
Classificationat2digitlevel(NIC04)
Division Classificationat2digitlevel(NIC04)
15 ManufactureofFoodProductsandBeverages
16 ManufactureofTobaccoProducts
17 ManufactureofTextiles
18 ManufactureofWearingApparelDressingandDyeingofFur
TanningandDressingofLeatherManufactureofLuggage,Handbags,Saddler,Harnessand
19
Footwear
ManufactureofWoodandProductsofWoodandCork,ExceptFurniture,Manufactureof
20
ArticlesofStrawandPlatingMaterials
21 ManufactureofPaperandPaperProducts
22 Publishing,PrintingandReproductionofRecordedMedia
23 ManufactureofCoke,RefinedPetroleumProductsandNuclearFuel
24 ManufactureofChemicalsandProducts
25 ManufactureofRubberandPlasticProducts
26 ManufactureofOtherNonMetallicMineralProducts
27 ManufactureofBasicMetals
28 ManufactureofFabricatedMetalProducts,ExceptMachineryandEquipments
29 ManufactureofMachineryandEquipmentsN.E.C
30 ManufactureofOffice,AccountingandComputingMachinery
31 ManufactureofElectricalMachineryandApparatusN.E.C.
32 ManufactureofRadio,TelevisionandCommunicationEquipmentsandApparatus
33 ManufactureofMedical,PrecisionandOpticalInstruments,WatchesandClocks
34 ManufactureofMotorVehicles,TrailersandSemiTrailers
35 ManufactureofOtherTransportEquipment
36 ManufactureofFurniture;ManufacturingN.E.C.
37 Recycling
~89~
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Inter-regional disparities in industrial growth

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INTER-REGIONAL DISPARITIES

IN INDUSTRIAL GROWTH AND STRUCTURE

Institute for Studies in Industrial Development

i) Growth and Structural Changes in Indian Economy

An earlier draft of the paper was presented at a national workshop, organised to

Inter-regional disparity in levels of development and incomes is a major issue of

Public policy instruments, no doubt, influence the growth of economic

Contrasting the convergence hypothesis there is an equally strong view that

What has been the experience in India? Have inter-regional disparities in

i) How strong is the relationship between the level of industrialisation and

iv) How does the structure of industriesby product group,

Industry for the purpose of this study includes manufacturing. Period of

Among the three new statesChhattisgarh, Jharkhand and Uttarakhand

West Bengal saw a deindustrialisation insofar as manufacturing now

Similar phenomenon of a shift mainly from agriculture to services is observed

Insofar as decline in the share of agriculture is taken as a measure of

Did structural transformation in favour of manufacturing help in accelerating

Some of the less industrialised states have shown spectacular growth in

Growth rates of manufacturing in different states seem to show a tendency

Agro-based products have always dominated the Indian manufacturing

Agro-based industries accounted for as much as 77 per cent of manufacturing

In aggregate, agro-based industries contribute less to gross value added (24

Turning to the share of different states in employment in agro-based

Importance of different states in terms of their share in value added in agro-

Do the two segments of manufacturing industryagro-based and others

The above features suggest a high degree of specialization in the product

2021 *13.53 * * * * 60.10

There appears to be a significant similarity among states in so far as the top

2021 * * * *17.47 * 58.45

On the whole, unorganised segment of most of the industry groups seems

How narrow or diversified is the industrial structure of different states? In

Industrial base of Maharashtra is relatively wide consisting of 16 (out of 23)

Coefficients of specialization for different states are presented in Table 23

Highest productivity in any industry in any state is in transport equipment in

significant differences in productivity in the same industry groups. Thus, chemical

Yet, the technological differences as indicated by fixed capital per worker

Broad conclusions that emerge from this analysis of interstate differences in

93450 164958 130796 132224 106086 94240 68369 Haryana

9875 32162 20077 27124 11788 38592 11010 Assam

111318 138488 503373 318417 68712 445787 N.E. Chandigarh

industries, much more in the case of unorganised than of the organised

1. An indicated by the share of manufacturing in GSDP, Tamil Nadu,

2. Most states have experienced significant shift from agriculture to other

3. Growth rates of manufacturing GSDP have been quite divergent throughout

5. Organised sector accounts for major share of the GSDP in manufacturing, in

6. Agro-based industries have declined in importance in most states, except in

7. There is a significant similarity among the states in the pattern of

9. Large differences are observed in productivity across states, more so in the

Various factors that could have influenced the differential performance of

Some studies have taken several items of infrastructure as independent

Outcomes of our statistical exercises, however, do not imply that various

Bajpai, N. and Jeffrey D. Sachs (1996), Trends in Inter-State Inequalities of Income in

____ (1995), Economic Growth, New York, McGraw Hill.

Bhattacharjea, Aditya (2006), Labour Market Regulations and Industrial Performance in

Mathur, A. (1983), Regional Development and Income Disparities in India: A Sectoral

Mitra, A., S. Varoudakis and M. Veganzones-Varoudakis (2002), Productivity and Technical

Myrdal, G. (1957), Economic Theory and Underdeveloped Regions, London: Duckworth.

Nagaraj, R. (2011), Growth in Organised Manufacturing Employment: A

Reddy, D. Narasimha (2008), Labour Regulation, Industrial Growth and Employment: A

Sardamoni, K. (1969), Growth of Manufacturing Employment in the States 1950-

Sastry, D.V.S., Balwant Singh, Kaushik Bhattacharya and N.K. Unnikrishnan

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2021 13.53 * * * 60.10

2021 * * * 17.47 58.45